UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form	10-Q



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2018~~2019



o ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to �� .

Commission File Number 001-08454

ACCO Brands Corporation

(Exact Name of Registrant as Specified in Its Charter)



Delaware	36-2704017
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

Four Corporate Drive

Lake Zurich, Illinois60047

(Address of Registrant’s Principal Executive Office, Including Zip Code)

(847) 541-9500

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



~~Four Corporate Drive~~ ~~Lake Zurich, Illinois 60047~~ ~~(Address of Registrant’s Principal Executive Office, Including Zip Code)~~
~~(847) 541-9500~~ ~~(Registrant’s Telephone Number, Including Area Code)~~ Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ACCO	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ~~large~~"large accelerated filer, ~~accelerated~~" "accelerated filer, ~~smaller~~" "smaller reporting company," and ~~emerging~~"emerging growth ~~company~~company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x☒	Accelerated filer	o☐
Non-accelerated filer	o ☐(Do not check if a smaller reporting company)	Smaller reporting company	o☐
		Emerging growth company	o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

As of October ~~24, 2018,~~22, 2019, the registrant had outstanding ~~102,739,645~~96,986,635 shares of Common Stock.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.

Some of the factors that could affect our results or cause plans, actions and results to differ materially from current expectations are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2017, in "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2018, ~~in "Part II, Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q,~~ and the financial statement line item discussions set forth in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q and from time to time in our other Securities and Exchange Commission (the "SEC") filings.

Website Access to Securities and Exchange Commission Reports

The Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through its website its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the SEC.

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets	4
Consolidated Statements of Income	5
Consolidated Statements of Comprehensive Income	6
Condensed Consolidated Statements of Cash Flows	7
~~Notes to Condensed~~ Consolidated ~~Financial Statements~~Statement of Stockholders’ Equity	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3134
Item 3. Quantitative and Qualitative Disclosures About Market Risk	4346
Item 4. Controls and Procedures	4346
PART II — OTHER INFORMATION	4447
Item 1. Legal Proceedings	4447
Item 1A. Risk Factors	4447
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4647
Item 3. Defaults Upon Senior Securities	4647
Item 4. Mine Safety Disclosures	46
~~Item 5. Other Information~~	46
~~Item 6. Exhibits~~	46
~~SIGNATURES~~	48
Item 5. Other Information	48
Item 6. Exhibits	48
SIGNATURES	49

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
(in millions)	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	95.0		$	76.9		$	37.7		$	67.0
Accounts receivable, net	421.2			469.3			377.4			428.4
Inventories	332.1			254.2			312.5			340.6
Other current assets	48.3			29.2			45.3			44.2
Total current assets	896.6			829.6			772.9			880.2
Total property, plant and equipment	643.5			645.2			631.4			618.7
Less: accumulated depreciation	(377.3		)	(366.7		)	(372.0		)	(355.0		)
Property, plant and equipment, net	266.2			278.5			259.4			263.7
Right of use asset, leases							95.8			—
Deferred income taxes	118.2			137.9			105.0			115.1
Goodwill	684.4			670.3			709.7			708.9
Identifiable intangibles, net	802.0			839.9			756.8			787.0
Other non-current assets	35.8			42.9			22.5			31.5
Total assets	$	2,803.2		$	2,799.1		$	2,722.1		$	2,786.4
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable							$	3.6		$	—
Current portion of long-term debt	$	54.8		$	43.2		31.6			39.5
Accounts payable	211.5			178.2			175.7			274.6
Accrued compensation	42.5			60.9			46.1			41.6
Accrued customer program liabilities	120.0			141.1			89.2			114.5
Accrued interest	6.6			1.2
Lease liabilities							20.6			—
Other current liabilities	113.8			113.8			110.8			129.0
Total current liabilities	549.2			538.4			477.6			599.2
Long-term debt, net	958.6			889.2			882.5			843.0
Long-term lease liabilities							84.6			11.0
Deferred income taxes	173.9			177.1			183.0			176.2
Pension and post-retirement benefit obligations	242.7			275.5			226.8			257.2
Other non-current liabilities	129.7			144.8			100.7			110.1
Total liabilities	2,054.1			2,025.0			1,955.2			1,996.7
Stockholders' equity:
Common stock	1.1			1.1			1.0			1.1
Treasury stock	(33.9		)	(26.4		)	(38.2		)	(33.9		)
Paid-in capital	1,938.2			1,999.7			1,893.8			1,941.0
Accumulated other comprehensive loss	(470.7		)	(461.1		)	(478.4		)	(461.7		)
Accumulated deficit	(685.6		)	(739.2		)	(611.3		)	(656.8		)
Total stockholders' equity	749.1			774.1			766.9			789.7
Total liabilities and stockholders' equity	$	2,803.2		$	2,799.1		$	2,722.1		$	2,786.4

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share data)	2018			2017			2018			2017			2019			2018			2019			2018
Net sales	$	507.3		$	532.2		$	1,411.9		$	1,382.0		$	505.7		$	507.3		$	1,418.3		$	1,411.9
Cost of products sold	346.5			354.0			961.2			924.1			349.8			346.5			970.8			961.2
Gross profit	160.8			178.2			450.7			457.9			155.9			160.8			447.5			450.7
Operating costs and expenses:
Selling, general and administrative expenses	92.8			109.8			294.6			308.2			96.4			92.8			287.8			294.6
Amortization of intangibles	9.4			9.4			27.2			26.4			8.6			9.4			26.8			27.2
Restructuring charges	1.1			2.3			7.9			16.1			2.1			1.1			4.8			7.9
Total operating costs and expenses	103.3			121.5			329.7			350.7			107.1			103.3			319.4			329.7
Operating income	57.5			56.7			121.0			107.2			48.8			57.5			128.1			121.0
Non-operating expense (income):
Interest expense	11.6			10.7			30.9			31.3			11.5			11.6			33.6			30.9
Interest income	(1.1		)	(1.6		)	(3.5		)	(4.9		)	(0.7		)	(1.1		)	(2.9		)	(3.5		)
Non-operating pension income	(2.6		)	(2.0		)	(7.1		)	(6.2		)	(1.3		)	(2.6		)	(4.1		)	(7.1		)
Other expense (income), net	0.6			(0.2		)	1.6			(1.0		)
Other (income) expense, net													(0.9		)	0.6			0.1			1.6
Income before income tax	49.0			49.8			99.1			88.0			40.2			49.0			101.4			99.1
Income tax expense	13.4			19.2			27.4			30.3			12.2			13.4			38.1			27.4
Net income	$	35.6		$	30.6		$	71.7		$	57.7		$	28.0		$	35.6		$	63.3		$	71.7

Per share:
Basic income per share	$	0.34		$	0.28		$	0.68		$	0.53		$	0.29		$	0.34		$	0.63		$	0.68
Diluted income per share	$	0.34		$	0.28		$	0.66		$	0.52		$	0.28		$	0.34		$	0.62		$	0.66

Weighted average number of shares outstanding:
Basic	103.8			108.1			105.6			108.6			97.6			103.8			100.4			105.6
Diluted	105.9			110.3			107.9			111.5			98.9			105.9			101.9			107.9

Dividends per common share	$	0.06		$	—		$	0.18		$	—

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Net income	$	35.6		$	30.6		$	71.7		$	57.7		$	28.0		$	35.6		$	63.3		$	71.7
Other comprehensive income (loss), net of tax:
Unrealized (loss) income on derivative instruments, net of tax benefit (expense) of $0.3 and $0.2 and $(1.1) and $1.5, respectively	(0.7		)	—			2.8			(3.5		)
Unrealized income (loss) on derivative instruments, net of tax (expense) benefit of $(0.6) and $0.3 and $0.4 and $(1.1), respectively													1.4			(0.7		)	(0.9		)	2.8

Foreign currency translation adjustments, net of tax (expense) benefit of $1.2 and $0.4 and $(1.6) and $4.6, respectively	(4.5		)	1.2			(18.6		)	(5.6		)
Foreign currency translation adjustments, net of tax benefit (expense) of $0.9 and $1.2 and $0.5 and $(1.6), respectively													(25.1		)	(4.5		)	(22.4		)	(18.6		)

Recognition of deferred pension and other post-retirement items, net of tax (expense) benefit of $(0.4) and $0.6 and $(1.9) and $1.4, respectively	1.1			(2.0		)	6.2			(5.2		)
Recognition of deferred pension and other post-retirement items, net of tax (expense) of $(1.2) and $(0.4) and $(1.9) and $(1.9), respectively													4.2			1.1			6.6			6.2
Other comprehensive loss, net of tax	(4.1		)	(0.8		)	(9.6		)	(14.3		)	(19.5		)	(4.1		)	(16.7		)	(9.6		)

Comprehensive income	$	31.5		$	29.8		$	62.1		$	43.4		$	8.5		$	31.5		$	46.6		$	62.1

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2019			2018
Operating activities
Net income	$	71.7		$	57.7		$	63.3		$	71.7
Amortization of inventory step-up	—			0.9			0.2			—
Loss on disposal of assets	0.1			0.2			—			0.1
Depreciation	25.5			26.3			26.3			25.5
Other non-cash items							0.2			—
Amortization of debt issuance costs	1.5			2.4			1.7			1.5
Amortization of intangibles	27.2			26.4			26.8			27.2
Stock-based compensation	6.0			11.9			6.3			6.0
Loss on debt extinguishment	0.3			—			0.3			0.3
Changes in balance sheet items:
Accounts receivable	46.2			64.6			54.0			46.2
Inventories	(81.2		)	(48.4		)	34.8			(81.2		)
Other assets	(0.6		)	(5.0		)	(2.6		)	(0.6		)
Accounts payable	39.1			(3.5		)	(102.1		)	39.1
Accrued expenses and other liabilities	(58.1		)	(20.0		)	(40.8		)	(58.1		)
Accrued income taxes	7.0			2.2			6.7			7.0
Net cash provided by operating activities	84.7			115.7			75.1			84.7
Investing activities
Additions to property, plant and equipment	(26.3		)	(18.8		)	(21.9		)	(26.3		)
Proceeds from the disposition of assets	0.2			0.1			0.1			0.2
Cost of acquisitions, net of cash acquired	(37.3		)	(292.3		)	(42.1		)	(37.3		)
Other assets acquired							(5.2		)	—
Net cash used by investing activities	(63.4		)	(311.0		)	(69.1		)	(63.4		)
Financing activities
Proceeds from long-term borrowings	217.4			474.1			325.9			217.4
Repayments of long-term debt	(118.3		)	(180.5		)	(272.0		)	(118.3		)
Repayments of notes payable, net							(8.6		)	—
Payments for debt issuance costs	(0.6		)	(3.5		)	(3.3		)	(0.6		)
Dividends paid	(18.9		)	—			(18.1		)	(18.9		)
Repurchases of common stock	(75.0		)	(36.3		)	(56.8		)	(75.0		)
Payments related to tax withholding for stock-based compensation	(7.5		)	(9.3		)	(4.3		)	(7.5		)
Proceeds from the exercise of stock options	6.8			3.2			3.1			6.8
Net cash provided by financing activities	3.9			247.7
Net cash (used) provided by financing activities							(34.1		)	3.9
Effect of foreign exchange rate changes on cash and cash equivalents	(7.1		)	6.0			(1.2		)	(7.1		)
Net increase in cash and cash equivalents	18.1			58.4
Net (decrease) increase in cash and cash equivalents							(29.3		)	18.1
Cash and cash equivalents
Beginning of the period	76.9			42.9			67.0			76.9
End of the period	$	95.0		$	101.3		$	37.7		$	95.0
Cash paid during the year for:
Interest							$	27.6		$	22.8
Income taxes							$	38.6		$	24.5

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)



(in millions)	Common Stock			Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Accumulated Deficit			Total
Balance at December 31, 2018	$	1.1		$	1,941.0		$	(461.7	)	$	(33.9	)	$	(656.8	)	$	789.7
Net loss	—			—			—			—			(0.6		)	(0.6		)
Loss on derivative financial instruments, net of tax	—			—			(1.1		)	—			—			(1.1		)
Translation impact	—			—			(3.1		)	—			—			(3.1		)
Pension and post-retirement adjustment, net of tax	—			—			(1.1		)	—			—			(1.1		)
Common stock repurchases	—			(11.0		)	—			—			—			(11.0		)
Stock-based compensation	—			2.0			—			—			—			2.0
Common stock issued, net of shares withheld for employee taxes	—			—			—			(4.3		)	—			(4.3		)
Dividends declared, $.06 per share	—			—			—			—			(6.2		)	(6.2		)
Other	—			(0.1		)	—			—			0.1			—
Cumulative effect due to the adoption of ASU 2016-02	—			—			—			—			0.5			0.5
Balance at March 31, 2019	1.1			1,931.9			(467.0		)	(38.2		)	(663.0		)	764.8
Net income	—			—			—			—			35.9			35.9
Loss on derivative financial instruments, net of tax	—			—			(1.2		)	—			—			(1.2		)
Translation impact	—			—			5.8			—			—			5.8
Pension and post-retirement adjustment, net of tax	—			—			3.5			—			—			3.5
Common stock repurchases	—			(28.3		)	—			—			—			(28.3		)
Stock-based compensation	—			3.6			—			—			(0.2		)	3.4
Common stock issued, net of shares withheld for employee taxes	—			0.2			—			—			—			0.2
Dividends declared, $.06 per share	—			—			—			—			(6.0		)	(6.0		)
Other	(0.1		)	0.1			—			—			(0.1		)	(0.1		)
Balance at June 30, 2019	1.0			1,907.5			(458.9		)	(38.2		)	(633.4		)	778.0
Net income	—			—			—			—			28.0			28.0
Gain on derivative financial instruments, net of tax	—			—			1.4			—			—			1.4
Translation impact	—			—			(25.1		)	—			—			(25.1		)
Pension and post-retirement adjustment, net of tax	—			—			4.2			—			—			4.2
Common stock repurchases	(0.1		)	(17.6		)	—			—			—			(17.7		)
Stock-based compensation	—			1.0			—			—			(0.1		)	0.9
Common stock issued, net of shares withheld for employee taxes	—			2.9			—			—			—			2.9
Dividends declared, $.06 per share	—			—			—			—			(5.9		)	(5.9		)
Other	0.1			—			—			—			0.1			0.2
Balance at September 30, 2019	$	1.0		$	1,893.8		$	(478.4	)	$	(38.2	)	$	(611.3	)	766.9

Shares of Capital Stock



	Common Stock		Treasury Stock	Net Shares
Shares at December 31, 2018	106,249,322		3,500,622	102,748,700
Common stock issued, net of shares withheld for employee taxes	1,437,021		458,987	978,034
Common stock repurchases	(1,260,163	)	—	(1,260,163	)
Shares at March 31, 2019	106,426,180		3,959,609	102,466,571
Common stock issued, net of shares withheld for employee taxes	44,180		7,836	36,344
Common stock repurchases	(3,443,904	)	—	(3,443,904	)
Shares at June 30, 2019	103,026,456		3,967,445	99,059,011
Common stock issued, net of shares withheld for employee taxes	386,781		—	386,781
Common stock repurchases	(2,258,645	)	—	(2,258,645	)
Shares at September 30, 2019	101,154,592		3,967,445	97,187,147

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

Continued (Unaudited)



(in millions)	Common Stock		Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Accumulated Deficit			Total
Balance at December 31, 2017	$	1.1	$	1,999.7		$	(461.1	)	$	(26.4	)	$	(739.2	)	$	774.1
Net income	—		—			—			—			10.4			10.4
Gain on derivative financial instruments, net of tax	—		—			0.6			—			—			0.6
Translation impact	—		—			(4.3		)	—			—			(4.3		)
Pension and post-retirement adjustment, net of tax	—		—			(2.6		)	—			—			(2.6		)
Common stock repurchases	—		(9.3		)	—			—			—			(9.3		)
Stock-based compensation	—		3.5			—			—			(0.3		)	3.2
Common stock issued, net of shares withheld for employee taxes	—		5.2			—			(7.5		)	—			(2.3		)
Dividends declared, $.06 per share	—		—			—			—			(6.3		)	(6.3		)
Cumulative effect due to the adoption of ASU 2014-09	—		—			—			—			1.5			1.5
Balance at March 31, 2018	1.1		1,999.1			(467.4		)	(33.9		)	(733.9		)	765.0
Net income	—		—			—			—			25.7			25.7
Gain on derivative financial instruments, net of tax	—		—			2.9			—			—			2.9
Translation impact	—		—			(9.8		)	—			—			(9.8		)
Pension and post-retirement adjustment, net of tax	—		—			7.7			—			—			7.7
Common stock repurchases	—		(41.7		)	—			—			—			(41.7		)
Stock-based compensation	—		4.1			—			—			(0.2		)	3.9
Common stock issued, net of shares withheld for employee taxes	—		1.0			—			—			—			1.0
Dividends declared, $.06 per share	—		—			—			—			(6.4		)	(6.4		)
Balance at June 30, 2018	1.1		1,962.5			(466.6		)	(33.9		)	(714.8		)	748.3
Net income	—		—			—			—			35.6			35.6
Loss on derivative financial instruments, net of tax	—		—			(0.7		)	—			—			(0.7		)
Translation impact	—		—			(4.5		)	—			—			(4.5		)
Pension and post-retirement adjustment, net of tax	—		—			1.1			—			—			1.1
Common stock repurchases	—		(24.0		)	—			—			—			(24.0		)
Stock-based compensation	—		(0.9		)	—			—			(0.2		)	(1.1		)
Common stock issued, net of shares withheld for employee taxes	—		0.5			—			—			—			0.5
Dividends declared, $.06 per share	—		—			—			—			(6.2		)	(6.2		)
Other	—		0.1			—			—			—			0.1
Balance at September 30, 2018	$	1.1	$	1,938.2		$	(470.7	)	$	(33.9	)	$	(685.6	)	$	749.1

Shares of Capital Stock



	Common Stock		Treasury Stock	Net Shares
Shares at December 31, 2017	109,597,197		2,913,113	106,684,084
Common stock issued, net of shares withheld for employee taxes	2,442,703		580,755	1,861,948
Common stock repurchases	(760,473	)	—	(760,473	)
Shares at March 31, 2018	111,279,427		3,493,868	107,785,559
Common stock issued, net of shares withheld for employee taxes	115,620		1,933	113,687
Common stock repurchases	(3,272,480	)	—	(3,272,480	)
Shares at June 30, 2018	108,122,567		3,495,801	104,626,766
Common stock issued, net of shares withheld for employee taxes	75,171		1,286	73,885
Common stock repurchases	(1,961,006	)	—	(1,961,006	)
Shares at September 30, 2018	106,236,732		3,497,087	102,739,645

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

As used in this Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2018~~2019, the terms "ACCO Brands," "ACCO," the "Company," "we," "us," and "our" refer to ACCO Brands Corporation and its consolidated subsidiaries.

The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and notes contained in this Quarterly Report on Form 10-Q.

The condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the SEC. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

The Condensed Consolidated Balance Sheet as of September 30, ~~2018,~~2019, the related Consolidated Statements of Income, ~~and~~ the Consolidated Statements of Comprehensive Income, and the Consolidated Statement of Stockholders' Equity for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 and Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 are unaudited. The December 31, ~~2017~~2018 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all annual disclosures required by GAAP. The above referenced financial statements included herein were prepared by management and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of results of operations and cash flows for the interim periods ended September 30, ~~2018~~2019 and ~~2017,~~2018, and the financial position of the Company as of September 30, ~~2018.~~2019. Interim results may not be indicative of results for a full year.

Effective August 1, 2019, we completed the acquisition (the "Foroni Acquisition") of Indústria Gráfica Foroni Ltda. ("Foroni"), a leading provider of Foroni^®branded notebooks and paper-based school and office products in Brazil, for a preliminary purchase price of $42.1 million, subject to working capital and other adjustments. The Foroni Acquisition advances our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base. The results of Foroni are included in the ACCO Brands International segment from August 1, 2019.

On July 2, 2018, ~~the Company~~we completed the acquisition (the "GOBA Acquisition") of GOBA Internacional, S.A. de C.V. ("GOBA"), a leading provider of Barrilito^®branded school and craft products in ~~Mexico under the Barrilito~~^®~~brand, for a preliminary~~Mexico. The purchase price ~~of approximately $37.3~~was $37.2 million, net of cash acquired, and ~~subject to~~ working capital and other adjustments. The GOBA Acquisition ~~is expected to increase~~has increased the breadth and depth of our distribution throughout Mexico, especially with wholesalers and retailers ~~throughout Mexico~~ and ~~complement our existing office products portfolio with~~added a strong offering of school ~~products.~~and craft products to our product portfolio in Mexico. The results of GOBA are included in the ACCO Brands International segment ~~as of~~from July 2, 2018.

On January 31, 2017, the Company completed the acquisition (the "Esselte Acquisition") of Esselte Group Holdings AB ("Esselte"). Accordingly, the financial results of Esselte are included in the Company's condensed consolidated financial statements as of February 1, 2017, and are reflected in all three of the Company's reportable segments.

See "Note 3. Acquisitions" for details on the Foroni and GOBA acquisitions.

~~In accordance with~~On January 1, 2019, the Company adopted accounting standard ASU No. 2016-02, Leases (Topic 842), applying the transition method in accounting standard ASU 2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of the Accounting Standard Update ("ASU") No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, the Company has retrospectively revised its presentation of pension costs, reclassifying the non-service components of periodic pension income/cost to "Non-operating pension income"retained earnings in the ~~Consolidated Statements~~period of ~~Income. See~~adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For more information, see "Note 2. Recent Accounting Pronouncements and Adopted Accounting Standards" and "Note 5. Leases."

Certain prior year amounts have been reclassified for ~~details on~~consistency with the ~~new standard.~~current year presentation in our Condensed Consolidated Balance Sheet, primarily due to the Company's adoption of ASU No. 2016-02, Leases (Topic 842) at the beginning of 2019.

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

2. Recent Accounting Pronouncements and Adopted Accounting Standards

Recent Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service ~~Contract.~~Contract. This ASU aligns the requirements for capitalizing implementation costs

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ~~The~~While the Company isdoes not expect a material impact to its consolidated financial statements, we are currently in the process of evaluating the ~~impact of~~ adoption of ASU ~~2018-15 on the Company’s consolidated financial statements.~~2018-15. ASU 2018-015 is effective for fiscal years ending after December 15, 2019. Early adoption of the standard is permitted, including adoption in any interim period for which financial statements have not been issued.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), Disclosure Framework - Changes to the Disclosures Requirements for Defined Benefit Plans Income Statement - Reporting Comprehensive Income (Topic 220). This ASU removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant. The Company does not expect the adoption of ASU 2018-14 to have a material impact on its consolidated financial statements. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. Early adoption is permitted for all entities and is to be applied on a retrospective basis. The Company will adopt ASU ~~2018-14 at the end of its 2018 fiscal year.~~No. 2018-15 beginning January 1, 2020.

~~In February 2018, the FASB~~There are no other recently issued ~~ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). In December 2017, the Tax Cuts and Jobs Act (the "U.S. Tax Act") was signed into law. Prior~~accounting standards that are expected to ASU 2018-02, GAAP required deferred tax assets and deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period including the enactment date. The U.S. Tax Act reduces the historical U.S. corporate tax rate and the effect of that change is required to be included in income from continuing operations, even if the original tax effects were recorded in Accumulated Other Comprehensive Income ("AOCI"). This could cause some tax effects to become stranded in AOCI as they are not updated to reflect the new tax rate. This new standard allows a company to elect to reclass the stranded tax effects resulting from the U.S. Tax Act from AOCI to retained earnings. The adoption of the new standard may be applied in the period of adoption or retrospectively to each period(s) effected by the change in the corporate tax rate. The Company is currently in the process of evaluating thehave an impact ~~of adoption of ASU 2018-02~~ on the Company’s ~~consolidated~~ financial ~~statements. ASU 2018-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption~~condition, results of operations or cash flow.

Recently Adopted Accounting Standards

On January 1, 2019, the ~~standard is permitted, including adoption in any interim period for which financial statements have not been issued.~~

~~In August 2017, the FASB issued ASU No. 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. This ASU improves certain aspects of the hedge~~Company adopted accounting model, including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. The Company is currently in the process of assessing the impact of adoption of ASU 2017-12 on the Company's consolidated financial statements. The Company will adopt ASU 2017-12 at the beginning of its 2019 fiscal year.

~~In February 2016, the FASB issued~~standard ASU No. 2016-02, Leases (Topic 842)~~. This ASU amends~~, applying the ~~existing~~transition method in accounting standard for leases. The amendments are intended to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The new standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and disclosures, but expects the impact to the Company’s Consolidated Balance Sheet to be material. At this time, the Company does not expect the adoption of ASU 2016-02 to have a material impact on its Consolidated Statements of Income. The Company is in the process of analyzing existing leases, practical expedients, and deploying its implementation strategy. The Company will adopt ASU 2016-02 at the beginning of its 2019 fiscal year.

~~In July 2018, the FASB issued~~ ASU 2018-11 Leases (Topic 842), Targeted Improvements. ~~With this~~ ASU ~~the FASB decided to provide another transition method in addition to the existing transition method by allowing entities~~2018-11 allows an entity to initially apply ASU 2016-02 at the adoption date ~~(January 1, 2019 for the Company)~~ and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. An entity that elects this additional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840. The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements that entities previously were not required to provide). The Company will apply this new transition method upon adoption of ASU 2016-02.

~~There are no other recently issued accounting standards that are expected to have a material effect on the Company’s financial condition, results of operations or cash flow.~~

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

~~Recently Adopted Accounting Standards~~

On January 1, 2018, we adopted the accounting standard ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires presentation of all components of net periodic pension and postretirement benefit costs, other than service costs, in an income statement line item included in "Non-operating expense (income)." The service cost component will continue to be presented in selling, general and administrative expenses ("SG&A"). The Company used the practical expedient which permits an employer to use the amounts disclosed in its pension disclosures as the basis for applying the retrospective presentation requirements. On this basis, the Company restated its operating income, which was reduced by $8.5 million for the year ended December 31, 2017. For the three and nine months ended September 30, 2017 the restated amounts were $2.0 million and $6.2 million, respectively.

On January 1, 2018, we adopted the accounting standard ASU 2014-09, Revenue from Contracts with Customers and all the related amendments (Topic 606) and applied it to contracts which were not completed as of January 1, 2018 using the modified retrospective method. A completed contract is one where all (or substantially all) of the revenue was recognized in accordance with the revenue guidance that was in effect before the date of initial application of ASU 2014-09. We recognized the cumulative effect of $1.6 million, net of tax, upon adopting ASU 2014-09 as an addition to opening retained earnings as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The majority of our revenue is recognized at a point in time, when control is transferred to our customer, which is usually when products are shipped or delivered based upon the specific terms contained within the agreement. Our general payment terms are usually within 30-90 days. We do not have any significant financing components.

The cumulative effect of the changes on our January 1, ~~2018~~2019, opening Condensed Consolidated Balance Sheet due to the adoption of ASU ~~2014-09~~2016-02 was as follows:

(in millions) Balance at December 31, 2017 Adjustments due to ASU 2014-09 Balance at January 1, 2018
Assets:
Inventories $ 254.2
$ (3.5 ) $ 250.7
Other current assets 29.2
6.9
36.1

Liabilities and stockholders' equity:
Accrued customer program liabilities 141.1
1.1
142.2
Other current liabilities 113.8
0.1
113.9
Deferred income taxes 177.1
0.6
177.7
Accumulated deficit (739.2 ) 1.6
(737.6 )



(in millions)	Balance at December 31, 2018			Adjustments due to ASU 2016-02			Balance at January 1, 2019
Assets:
Property, plant and equipment, net	$	263.7		$	(0.9	)	$	262.8
Right of use asset, leases	—			90.9			90.9

Liabilities and stockholders' equity:
Current portion of long-term debt	39.5			(0.1		)	39.4
Lease liabilities	—			24.1			24.1
Long-term debt, net	843.0			(0.1		)	842.9
Long-term lease liabilities	11.0			65.6			76.6
Accumulated deficit	(656.8		)	0.5			(656.3		)

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The impact of the adoption of ASU ~~2014-09~~2016-02 on our ~~Consolidated Statements of Income and~~ Condensed Consolidated Balance Sheet for the ~~three and nine-month periods~~period ended September 30, ~~2018~~2019 was as follows:



	Balance at September 30, 2019
(in millions)	As Reported			Balances without adoption of ASU 2016-02			Effect of Change Higher/(Lower)
Condensed Consolidated Balance Sheet:
Assets:
Property, plant and equipment, net	$	259.4		$	260.2		$	(0.8	)
Right of use asset, leases	95.8			—			95.8

Liabilities and stockholders' equity:
Current portion of long-term debt	31.6			31.7			(0.1		)
Lease liabilities	20.6			0.3			20.3
Long-term debt, net	882.5			882.6			(0.1		)
Long-term lease liabilities	84.6			10.2			74.4
Accumulated deficit	(611.3		)	(611.8		)	0.5

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
(in millions) As Reported Balances without adoption of ASU 2014-09 Effect of Change Higher/(Lower) As Reported Balances without adoption of ASU 2014-09 Effect of Change Higher/(Lower)
Consolidated Statements of Income:
Net sales $ 507.3
$ 508.0
$ (0.7 ) $ 1,411.9
$ 1,413.1
$ (1.2 )
Cost of products sold 346.5
346.9
(0.4 ) 961.2
961.9
(0.7 )
Income tax expense 13.4
13.4
—
27.4
27.5
(0.1 )
Net income 35.6
35.9
(0.3 ) 71.7
72.1
(0.4 )

Condensed Consolidated Balance Sheet:
Assets:
Accounts receivable, net 421.2
418.7
2.5
Inventories 332.1
335.1
(3.0 )
Other current assets 48.3
42.3
6.0

Liabilities and stockholders' equity:
Accrued customer program liabilities 120.0
120.8
(0.8 )
Other current liabilities 113.8
109.2
4.6
Deferred income taxes 173.9
173.4
0.5
Accumulated deficit (685.6 ) (686.8 ) 1.2

See "Note 5. ~~Revenue Recognition"~~Leases" for further details and the required disclosures related to ASU ~~2014-09.~~2016-02.

The adoption of ASU 2016-02 did not materially affect our Consolidated Statements of Income, Condensed Consolidated Statements of Cash Flows or Consolidated Statement of Stockholders' Equity.

There were no other accounting standards that were adopted in the first nine months of 2019 that had a material effect on the Company’s financial condition, results of operations or cash flow.

3. Acquisitions

Acquisition of ~~GOBA~~Foroni

~~On July 2, 2018, the Company~~Effective August 1, 2019, we completed the ~~GOBA Acquisition. GOBA is~~acquisition of Foroni, a leading provider of Foroni^®branded notebooks and paper-based school and ~~craft~~office products in ~~Mexico under the Barrilito~~^®~~brand.~~Brazil. The ~~GOBA~~Foroni Acquisition ~~is expected~~advances our strategy to ~~increase the breadth~~expand in faster growing geographies and ~~depth of~~product categories, add consumer-centric brands and diversify our ~~distribution, especially with wholesalers and retailers throughout Mexico and complement our existing office products portfolio with a strong offering of school products.~~customer base. The results of ~~GOBA~~Foroni are included in the ACCO Brands International segment ~~as of July 2, 2018.~~from August 1, 2019.

The preliminary purchase price ~~paid at closing~~ was ~~Mex$782.5~~R$159.5 million (US$~~39.2~~42.1 million based on July ~~2, 2018~~31, 2019, exchange rates), subject to working capital and other ~~adjustments. The preliminary purchase price, net~~adjustments and includes the assumption of ~~cash acquired of $1.9~~$7.6 million ~~was $37.3 million.~~in debt. A portion of the purchase price ~~(Mex$115.0~~(R$25.0 million ~~($5.8~~or US$6.6 million based on July ~~2, 2018~~31, 2019 exchange rates)) is being held in an escrow account for a period of up to 56 years after closing in the event of any claims against the sellers under the ~~stock~~quota purchase agreement. The Company may also make claims against the sellers directly, subject to limitations in the ~~stock~~quota purchase agreement, if the escrow is depleted. The ~~GOBA~~Foroni Acquisition and related expenses were funded by ~~increased borrowing under our 2017 Revolving Facility (as defined below).~~cash on hand.

For accounting purposes, the Company was the acquiring enterprise. The ~~GOBA~~Foroni Acquisition ~~was~~is being accounted for as a purchase business combination and ~~GOBA's~~Foroni's results are included in the Company’s condensed consolidated financial statements as of ~~July 2, 2018.~~August 1, 2019. The net sales for ~~GOBA~~Foroni for ~~both~~each of the three and nine months ended September 30, ~~2018~~2019 were ~~$10.0 million.~~$5.7 million for the two months owned.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table presents the preliminary allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of ~~acquisition.~~acquisition:


(in millions)	At July 2, 2018		At August 2, 2019
Calculation of Goodwill:
Purchase price, net of working capital adjustment	$	39.2	$	42.1

Plus fair value of liabilities assumed:
Accounts payable and accrued liabilities	9.0		12.1
Deferred tax liabilities	3.2		5.2
Other non-current liabilities	5.5
Debt			7.6
Lease liabilities			4.8
Fair value of liabilities assumed	$	17.7	$	29.7

Less fair value of assets acquired:
Cash acquired	1.9		—
Accounts receivable	28.6		17.5
Inventory	7.3		12.6
Property, plant and equipment	0.6
Property and equipment			8.9
Identifiable intangibles	10.5		10.2
Deferred tax assets	1.8		2.2
Right of use asset, leases			4.8
Other assets	4.2		3.7
Fair value of assets acquired	$	54.9	$	59.9

Goodwill	$	2.0	$	11.9

We are continuing our review of our fair value estimate of assets acquired and liabilities assumed during the measurement period, which will conclude as soon as we receive the information we are seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not available. This measurement period will not exceed one year from the acquisition date. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The preliminary goodwill of $11.9 million is primarily attributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from the existence of an assembled workforce.

Our fair value estimate of assets acquired and liabilities assumed is pending the completion of several elements, including the ~~valuations~~final determination of the purchase price, pending calculations of working capital and other adjustments, of the fair value of the assets acquired and liabilities assumed and the final review by our management. The primary areas that are not yet finalized relate to inventory, intangible assets, property ~~plant~~ and equipment, reserves and liabilities, and income and other taxes. Accordingly, there could be material adjustments to our condensed consolidated financial statements, including changes in our amortization and depreciation expense related to the valuation of intangible assets and property and equipment acquired and their respective useful lives, among other adjustments.

The final determination of the purchase price, fair values and resulting goodwill may differ significantly from what is reflected in these condensed consolidated financial statements.

During the ~~three and~~ nine months ended September 30, ~~2018,~~2019, transaction costs related to the ~~GOBA~~Foroni Acquisition were ~~$0.6 million and $0.9 million, respectively.~~$1.3 million. These costs were reported as ~~interest and~~ selling, general and administrative ("SG&A") expenses in the Company's Consolidated Statements of Income.

Pro forma financial information is not presented due to immateriality.

~~Acquisition of Esselte~~

On January 31, 2017, ACCO Europe Limited ("ACCO Europe"), an indirect wholly-owned subsidiary of the Company, completed the Esselte Acquisition. The Esselte Acquisition was made pursuant to the share purchase agreement dated October 21, 2016, as amended (the "Purchase Agreement"), among ACCO Europe, the Company and an entity controlled by J. W. Childs (the

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~"Seller").~~

Cumberland Asset Acquisition

On January 31, 2019, the Company completed the purchase of certain assets, including inventory and certain identifiable intangibles, for the Cumberland brand (the "Cumberland Asset Acquisition") in Australia for a ~~result~~purchase price of A$8.2 million (US$6.0 million based on January 31, 2019 exchange rates). The Cumberland Asset Acquisition extends our presence in Australia into new product categories. The Company accounted for the transaction as an asset acquisition, as the set of ~~Esselte, ACCO Brands became~~assets acquired does not meet the criteria to be classified as a business under GAAP. During the nine months ended September 30, 2019, transaction costs related to the Cumberland Asset Acquisition were $0.1 million. These costs were reported as SG&A expenses in the Company's Consolidated Statements of Income.

The following table summarizes the fair value of assets acquired:



(in millions)	At January 31, 2019
Inventory	$	2.8
Identifiable intangibles	3.2
Fair value of assets acquired	$	6.0

Acquisition of GOBA

On July 2, 2018, the Company completed the GOBA Acquisition. GOBA is a leading ~~European manufacturer~~provider of Barrilito^®branded school and ~~marketer~~craft products in Mexico. The GOBA Acquisition increased the breadth and depth of ~~branded consumer~~our distribution throughout Mexico, especially with wholesalers and ~~office products. The Esselte Acquisition~~retailers and added ~~the Leitz~~^®~~, Rapid~~^®a strong offering of school and ~~Esselte~~^® ~~brands~~craft products to our product portfolio in the storage and organization, stapling, punching, business machines and do-it-yourself tools product categories to the Company's portfolio. The combination improved ACCO Brands’ scale and enhanced its position as an industry leader in Europe.Mexico.

The purchase price paid at closing was ~~€302.9~~Mex$796.8 million (US$~~326.8~~39.9 million based on ~~January 31, 2017~~July 2, 2018 exchange rates), and was ~~subject to a~~later reduced by $0.8 million of working capital ~~adjustment that reduced it by $0.3 million.~~adjustments. The purchase price, net of cash acquired of ~~$34.2~~$1.9 million, was ~~$292.3~~$37.2 million. A portion of the purchase price ~~(€8.1~~(Mex$115.0 million (US$~~8.7~~5.8 million based on ~~January 31, 2017~~July 2, 2018 exchange rates)) is being held in an escrow account for a period of up to ~~two~~5 years after closing ~~as ACCO Europe’s sole recourse against Seller~~ in the event of any claims against ~~Seller~~the sellers under the ~~Purchase Agreement. As of September 30, 2018,~~stock purchase agreement. The Company may also make claims against the ~~balance remaining~~sellers directly, subject to limitations in the stock purchase agreement, if the escrow account was $6.9 million. A warranty and indemnity insurance policy held by the Company and ACCO Europe insures certain of Seller’s contractual obligations to ACCO Europe under the Purchase Agreement for up to €40.0 million (US$43.2 million based on January 31, 2017 exchange rates) for a period of up to seven years, subject to certain deductibles and limitations set forth in the policy.

is depleted. The ~~Esselte~~GOBA Acquisition and related expenses were funded ~~through a term loan of €300.0 million (US$320.8 million based on January 27, 2017 exchange rates) and cash on hand.~~by increased borrowing under our revolving facility.

For accounting purposes, the Company was the acquiring enterprise. The ~~Esselte~~GOBA Acquisition was accounted for as a purchase ~~combination and Esselte's~~business combination. The results of GOBA are included in the ~~Company’s condensed consolidated financial statements~~ACCO Brands International segment as of ~~February 1, 2017.~~July 2, 2018. The ~~January 2018 net sales for Esselte were $44.2 million. Esselte contributed $107.7 million and $274.5 million of~~ net sales for the ~~three~~six month period ended June 30, 2019 for GOBA were $23.7 million.

ACCO Brands Corporation and ~~nine months ended September 30, 2017, respectively.~~Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table presents the allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of acquisition.



(in millions)	At July 2, 2018
Calculation of Goodwill:
Purchase price, net of working capital adjustment	$	39.1

Plus fair value of liabilities assumed:
Accounts payable and accrued liabilities	10.1
Deferred tax liabilities	3.1
Other non-current liabilities	6.5
Fair value of liabilities assumed	$	19.7

Less fair value of assets acquired:
Cash acquired	1.9
Accounts receivable	30.0
Inventory	7.1
Property, plant and equipment	0.6
Identifiable intangibles	10.3
Deferred tax assets	2.0
Other assets	4.2
Fair value of assets acquired	$	56.1

Goodwill	$	2.7

(in millions) At January 31, 2017
Calculation of Goodwill:
Purchase price, net of working capital adjustment $ 326.5

Plus fair value of liabilities assumed:
Accounts payable and accrued liabilities 121.9
Deferred tax liabilities 83.6
Pension obligations 174.1
Other non-current liabilities 5.8
Fair value of liabilities assumed $ 385.4

Less fair value of assets acquired:
Cash acquired 34.2
Accounts receivable 60.0
Inventory 41.9
Property, plant and equipment 75.6
Identifiable intangibles 277.0
Deferred tax assets 106.3
Other assets 10.4
Fair value of assets acquired $ 605.4

Goodwill $ 106.5

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

In the ~~fourth~~second quarter of ~~2017,~~2019, we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date.

The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. The goodwill of $106.5 million is primarily attributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from the existence of an assembled workforce.

During the ~~three and nine months~~year ended ~~September 30, 2017,~~December 31, 2018, transaction costs related to the ~~Esselte~~GOBA Acquisition were ~~$1.6 million and $5.0 million, respectively.~~$1.1 million. These costs were reported as ~~selling, general~~interest and ~~administrative~~SG&A expenses in the Company's Consolidated Statements of Income.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

4. Long-term Debt and Short-term Borrowings

Notes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018:



(in millions)	September 30, 2019		December 31, 2018
Euro Senior Secured Term Loan A, due May 2024 (floating interest rate of 1.75% at September 30, 2019)	$	273.0	$	—
Euro Senior Secured Term Loan A, due January 2022 (floating interest rate of 1.50% at December 31, 2018)	—		289.0
USD Senior Secured Term Loan A, due May 2024 (floating interest rate of 3.94% at September 30, 2019)	98.7		—
Australian Dollar Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.76% at September 30, 2019)	40.8		—
Australian Dollar Senior Secured Term Loan A, due January 2022 (floating interest rate of 3.56% at December 31, 2018)	—		43.0
U.S. Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 3.94% at September 30, 2019)	64.7		—
U.S. Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 4.36% at December 31, 2018)	—		106.8
Australian Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 2.78% at September 30, 2019)	67.7		—
Australian Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.54% at December 31, 2018)	—		73.9
Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	375.0		375.0
Other borrowings	3.6		0.3
Total debt	923.5		888.0
Less:
Current portion	35.2		39.5
Debt issuance costs, unamortized	5.8		5.5
Long-term debt, net	$	882.5	$	843.0

(in millions) September 30,
2018 December 31,
2017
Euro Senior Secured Term Loan A, due January 2022 (floating interest rate of 1.50% at September 30, 2018 and 1.50% at December 31, 2017) $ 318.6
$ 345.0
Australian Dollar Senior Secured Term Loan A, due January 2022 (floating interest rate of 3.50% at September 30, 2018 and 3.29% at December 31, 2017) 52.6
60.0
U.S. Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.87% at September 30, 2018 and 3.53% at December 31, 2017) 197.1
48.9
Australian Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.50% at September 30, 2018 and 3.28% at December 31, 2017) 75.7
85.0
Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%) 375.0
400.0
Other borrowings 0.4
0.6
Total debt 1,019.4
939.5
Less:
Current portion 54.8
43.2
Debt issuance costs, unamortized 6.0
7.1
Long-term debt, net $ 958.6
$ 889.2

~~In connection with the Esselte Acquisition, the~~The Company entered into a ~~Third Amended and Restated~~ Credit Agreement (the ~~"2017 Credit~~"Credit Agreement"), dated as of January 27, 2017, among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto. The ~~2017~~ Credit Agreement ~~provides~~provided for a five-year senior secured credit facility, which ~~consists~~consisted of a €300.0 million (US$320.8 million based on January 27, 2017, exchange rates) term loan facility, an A$80.0 million (US$60.4 million based on January 27, 2017, exchange rates) term loan facility, and a US$400.0 million multi-currency revolving credit facility (the ~~"2017 Revolving~~"Revolving Facility").

Effective July 26, 2018, the Company entered into the First Amendment (the "First Amendment") to the ~~2017~~ Credit Agreement among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto. The First Amendment increased the aggregate revolving credit commitments under the ~~2017~~ Revolving Facility by $100.0 million such that, after giving effect to such increase, the aggregate amount of revolving credit available under the ~~2017~~ Revolving Facility iswas $500.0 million. In addition, the First Amendment also affected certain technical amendments to the ~~2017~~ Credit Agreement, including the addition of provisions relating to LIBOR successor rate procedures if LIBOR becomes unascertainable or is discontinued in the future and to expressly permit certain intercompany asset transfers. The changes related to LIBOR successor rate procedures are not expected to have a material effect on the Company.

As of September 30, 2018, there were $272.8 million in borrowings outstanding under the 2017 Revolving Facility. The remaining amount available for borrowings as of September 30, 2018 was $216.7 million (allowing for $10.5 million of letters of credit outstanding on that date).

~~During the second quarter of 2018,~~Effective May 23, 2019, the Company ~~repurchased $25.0 million of its Senior Unsecured Notes at par.~~entered into a Second Amendment (the "Second Amendment") to the Credit Agreement. Pursuant to the Second Amendment, the Credit Agreement was amended to, among other things:

extend the maturity date to May 23, 2024;

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

increase the aggregate revolving credit commitments under the Revolving Facility from $500.0 million to $600.0 million;

establish a new term loan facility denominated in U.S. Dollars in an aggregate principal amount of $100.0 million (the "USD Term Loan");

replace the minimum fixed coverage ratio of 1.25:1.00 with a minimum interest coverage ratio, as calculated under the Credit Agreement, of 3.00:1.00;

reflect a more favorable restricted payment covenant, with the consolidated leverage ratio hurdle for unlimited restricted payments (including share repurchases and dividends) as calculated under the Credit Agreement increasing from 2.50x to 3.25x;

reflect, in certain cases, more favorable pricing with a 25 basis point reduction in the applicable rate on outstanding loans than was in effect prior to the Second Amendment based on the Company's current consolidated leverage ratio, along with lower fees on undrawn amounts;

eliminate the requirement to make annual principal prepayments of excess cash flow;

reduce amortization payments for the term loans; and

increase the qualified receivables transaction basket with respect to sales or financings of certain receivables.

Effective upon the closing of the Second Amendment, the Company borrowed the entire principal amount committed under the USD Term Loan, which was used to repay revolver borrowings and, in combination with the increase in the Revolving Facility, resulted in $200.0 million of additional liquidity becoming available under the Revolving Facility.

We incurred and capitalized approximately $3.3 million in bank, legal and other fees associated with the Second Amendment.

As ~~described~~of September 30, 2019, there were $132.4 million in ~~the Company's 2017 Annual Report on Form 10-K, we must meet certain restrictive debt covenants~~borrowings outstanding under the ~~senior secured~~Revolving Facility. The remaining amount available for borrowings as of September 30, 2019, was $454.8 million (allowing for $12.8 million of letters of credit ~~facilities. The indenture governing our~~ outstanding ~~senior unsecured notes also contains certain covenants.~~ on that date).

As of and for the periods ended September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company was in compliance with all applicable loan covenants.

5. ~~Revenue Recognition~~Leases

On January 1, ~~2018,~~2019, the Company adopted accounting standard ASU ~~2014-09, Revenue from Contracts with Customers and all related amendments~~No. 2016-02, Leases (Topic ~~606)~~842), applying the ~~modified retrospective~~ transition method in accounting standard ASU 2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to ~~all customer contracts that were~~initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The comparative information has not ~~completed as of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under ASU 2014-09, while prior period amounts are not adjusted~~been restated and ~~continue~~continues to be reported under the accounting standards in effect for ~~the prior period.~~those periods. The Company recorded a net increase to beginning retained earnings of ~~$1.6~~$0.5 million as of January 1, ~~2018~~2019 due to the cumulative impact of adopting ASU ~~2014-09.~~2016-02. The impact of adopting ASU ~~2014-09 to~~2016-02 on our ~~financial statements~~Condensed Consolidated Balance Sheet was material, but the impact was immaterial for our Consolidated Statements of Income, Condensed Consolidated Statements of Cash Flows and Consolidated Statement of Stockholders' Equity.

The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, as well as vehicles, forklifts and other equipment. The Company determines if an arrangement is a lease at inception. Leases are included in "Right of use asset, leases" ("ROU Assets"), and ~~for~~ the ~~three and nine months ended September 30, 2018 was immaterial.~~

~~Revenue is recognized when control~~current portion of the ~~promised goods or services~~lease liability is ~~transferred to our customers~~included in ~~an amount reflective of~~"Lease liabilities" and the ~~consideration we expect to be receive~~non-current portion is included in ~~exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial~~"Long-term lease liabilities" in the ~~context~~Condensed Consolidated Balance Sheet. The Company currently has an immaterial amount of ~~the contract are expensed. We have elected the practical expedient to not disclose contracts that have~~financing leases and leases with a term of ~~1 year or less.~~

~~Performance Obligations~~

Atless than 12 months. ROU Assets and lease liabilities are recognized based on the ~~inception~~present value of ~~each contract,~~lease payments over the lease term. Because most of the Company’s leases do not provide an implicit rate of return, the Company ~~assesses~~uses its incremental collateralized borrowing rate, on a regional basis, in determining the ~~products and services promised and identifies each distinct performance obligation. To identify the performance obligations, the Company considers all products and services promised regardless~~present value of ~~whether they are explicitly stated or implied within the contract or by standard business practices.~~

Freight and distribution activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations.lease payments. The Company has ~~chosen to account~~lease agreements with lease and non-lease components, which are combined for ~~shipping and handling activities as a fulfillment activity, and therefore accrues the expense of freight and distribution in "Cost of products sold" when product is shipped.~~accounting purposes.

~~Nature of our Products and Services~~

~~Products~~: For our products, we transfer control and recognize a sale when we either ship the product from our manufacturing facility or distribution center, procure the product from one of our vendors, or upon delivery to a customer specified location depending upon the terms in the customer agreement. For consignment arrangements, revenue is not recognized until the products are sold to the end customer. The amount of consideration we receive and revenue we recognize is impacted by incentives ("Customer Program Costs"), including sales rebates (which are generally tied to achievement of certain sales volume levels); in-store promotional allowances; shared media and customer catalog allowances; other cooperative advertising arrangements; freight allowance programs offered to our customers; and allowance for discounts and returns. We recognize Customer Program Costs as a deduction to gross sales at the time that the associated revenue is recognized. We estimate discounts based upon an analysis of historical trends and record them as reductions to "Net sales" and "Accounts receivable, net". We estimate and record a returns reserve, on a gross basis, as a reduction to "Net sales" and "Cost of products sold" with increases to "Other current liabilities" and "Inventories." We adjust our estimate of revenue when the most likely amount of consideration we expect to receive changes.

~~Service or Extended Maintenance Agreements~~ ("EMAs"): Depending on the terms of the EMA, we may defer recognition of the consideration received for any unsatisfied obligations. We use an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach, for our separately priced service/maintenance agreements that extend mechanical and maintenance coverage beyond our base warranty coverage to our Print Finishing Solutions customers. These agreements range in duration from three months to 60 months, however, most agreements are one year or less. We generally receive payment at inception of the EMAs and recognize revenue over the term of the agreement on a straight line basis. As of January 1, 2018, there was $5.2 million of unearned revenue associated with outstanding EMAs, primarily reported in "Other current liabilities". During the three and nine months ended September 30, 2018, $4.0 million and $11.8 million of the unearned revenue was recognized, respectively. As of September 30, 2018, the amount of unearned revenue was $5.2 million. We expect to

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~recognize approximately $4.5 million~~The components of ~~the unearned amount in the next 12 months and $0.7 million in future periods beyond the next 12 months.~~

~~Disaggregation of Revenues~~

In accordance with ASU 2014-09, the following table disaggregates revenue from contracts with customers into regional geographies. The Company has determined that disaggregating revenue into these categories provides appropriate disclosure and achieves associated objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

~~The following table presents our revenue disaggregated by regional geography~~⁽¹⁾~~, based upon our reporting segments for the three and nine months ended September 30, 2018 and 2017:~~lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
United States $ 227.6
$ 252.1
$ 617.7
$ 654.4
Canada 35.8
38.2
94.1
91.4
ACCO Brands North America 263.4
290.3
711.8
745.8

ACCO Brands EMEA⁽²⁾
143.1
140.3
438.1
365.3

Australia/N.Z. 41.4
47.6
118.8
131.5
Latin America 47.6
43.2
106.7
105.1
Asia-Pacific 11.8
10.8
36.5
34.3
ACCO Brands International 100.8
101.6
262.0
270.9
Net sales $ 507.3
$ 532.2
$ 1,411.9
$ 1,382.0



	Three Months Ended September 30,			Nine Months Ended September 30,
(in millions)	2019			2019
Operating lease cost	$	7.3		$	21.7
Sublease income	(0.5		)	(1.3		)
Total lease cost	$	6.8		$	20.4

~~(1) Net sales are attributed~~Other information related to ~~geographic areas based on the location of the selling subsidiaries.~~

~~(2) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.~~

~~The following table presents our revenue disaggregated by the timing of revenue recognition for the three and nine months ended September 30, 2018:~~leases was as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2018
Product and services transferred at a point in time $ 483.1
$ 1,361.8
Product and services transferred over time 24.2
50.1
Net sales $ 507.3
$ 1,411.9



	Nine Months Ended September 30,
(in millions, except lease term and discount rate)	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	22.4
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	25.6

Weighted average remaining lease term:
Operating leases	7.2 years

Weighted average discount rate:
Operating leases	5.3		%

Future minimum lease payments, net of sub-lease income, for all non-cancelable leases as of September 30, 2019 were as follows:



(in millions)
2019	$	6.8
2020	24.7
2021	20.8
2022	17.0
2023	12.9
2024	11.4
Thereafter	40.3
Total minimum lease payments	133.9
Less imputed interest	28.2
Future minimum payments for leases, net of sublease rental income and imputed interest	$	105.7

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

6. Pension and Other Retiree Benefits

The components of net periodic benefit (income) cost for pension and post-retirement plans for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 were as follows:



	Three Months Ended September 30,
	Pension												Post-retirement
	U.S.						International
(in millions)	2019			2018			2019			2018			2019			2018
Service cost	$	0.3		$	0.4		$	0.3		$	0.6		$	—		$	—
Interest cost	1.8			1.6			3.3			3.1			0.1			0.1
Expected return on plan assets	(2.9		)	(2.9		)	(5.1		)	(5.6		)	—			—
Amortization of net loss (gain)	0.6			0.7			0.9			0.8			(0.1		)	(0.1		)
Amortization of prior service cost	0.1			0.1			0.1			—			—			—
Curtailment gain	—			—			—			(0.6		)	—			—
Net periodic benefit income⁽¹⁾	$	(0.1	)	$	(0.1	)	$	(0.5	)	$	(1.7	)	$	—		$	—

	Nine Months Ended September 30,
	Pension												Post-retirement
	U.S.						International
(in millions)	2019			2018			2019			2018			2019			2018
Service cost	$	1.0		$	1.2		$	0.9		$	1.6		$	—		$	—
Interest cost	5.5			5.0			10.1			9.8			0.2			0.1
Expected return on plan assets	(8.7		)	(8.8		)	(15.4		)	(17.3		)	—			—
Amortization of net loss (gain)	1.6			2.0			2.6			2.6			(0.3		)	(0.3		)
Amortization of prior service cost	0.3			0.3			0.1			—			—			—
Curtailment gain	—			—			—			(0.6		)	—			—
Net periodic benefit income⁽¹⁾	$	(0.3	)	$	(0.3	)	$	(1.7	)	$	(3.9	)	$	(0.1	)	$	(0.2	)

Three Months Ended September 30,
Pension Post-retirement
U.S. International
(in millions) 2018 2017 2018 2017 2018 2017
Service cost $ 0.4
$ 0.3
$ 0.6
$ 0.4
$ —
$ —
Interest cost 1.6
1.8
3.1
3.6
0.1
—
Expected return on plan assets (2.9 ) (3.1 ) (5.6 ) (5.6 ) —
—
Amortization of net loss (gain) 0.7
0.5
0.8
0.7
(0.1 ) (0.1 )
Amortization of prior service cost 0.1
0.1
—
—
—
—
Curtailment gain —
—
(0.6 ) —
—
—
Net periodic benefit income⁽¹⁾
$ (0.1 ) $ (0.4 ) $ (1.7 ) $ (0.9 ) $ —
$ (0.1 )

Nine Months Ended September 30,
Pension Post-retirement
U.S. International
(in millions) 2018 2017 2018 2017 2018 2017
Service cost $ 1.2
$ 1.0
$ 1.6
$ 1.2
$ —
$ —
Interest cost 5.0
5.3
9.8
10.0
0.1
0.1
Expected return on plan assets (8.8 ) (9.2 ) (17.3 ) (16.1 ) —
—
Amortization of net loss (gain) 2.0
1.5
2.6
2.2
(0.3 ) (0.3 )
Amortization of prior service cost 0.3
0.3
—
—
—
—
Curtailment gain —
—
(0.6 ) —
—
—
Net periodic benefit income⁽¹⁾
$ (0.3 ) $ (1.1 ) $ (3.9 ) $ (2.7 ) $ (0.2 ) $ (0.2 )


(1)	The components, other than service cost, are included in the line "Non-operating pension income" in the Consolidated Statements of Income.

We expect to contribute approximately $~~21.3~~20.4 million to our defined benefit plans in ~~2018~~2019. For the nine months ended September 30, ~~2018~~2019, we have contributed $~~18.4~~16.1 million to these plans.

7. Stock-Based Compensation

The following table summarizes our stock-based compensation expense (including stock options, restricted stock units ("RSUs") and performance stock units ("PSUs")) for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2019			2018			2019		2018
Stock option compensation expense	$	0.7		$	0.5		$	2.0	$	1.5
RSU compensation expense	1.2			0.8			4.1		3.7
PSU compensation expense	(1.0		)	(2.5		)	0.2		0.8
Total stock-based compensation expense	$	0.9		$	(1.2	)	$	6.3	$	6.0

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
Stock option compensation expense $ 0.5
$ 0.6
$ 1.5
$ 1.8
RSU compensation expense 0.8
0.8
3.7
3.5
PSU compensation expense (income) (2.5 ) 2.7
0.8
6.6
Total stock-based compensation expense (income) $ (1.2 ) $ 4.1
$ 6.0
$ 11.9

We generally recognize compensation expense for stock-based awards ratably over the vesting period. Stock-based compensation expense for each of the nine months endedSeptember 30, ~~2018~~2019 and ~~2017~~2018 includes $1.0 million ~~and $0.8 million, respectively,~~ of expense related to stock awards granted to eligible non-employee directors, which were fully vested on the grant date.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table summarizes our unrecognized compensation expense and the weighted-average period over which the expense will be recognized as of September 30, ~~2018:~~2019:



	September 30, 2019
	Unrecognized	Weighted Average
	Compensation	Years Expense To Be
(in millions, except weighted average years)	Expense	Recognized Over
Stock options	$4.2	2.0
RSUs	$6.8	2.0
PSUs	$5.7	2.1

September 30, 2018

Unrecognized Weighted Average

Compensation Years Expense To Be
(in millions, except weighted average years) Expense Recognized Over
Stock options $3.9 2.1
RSUs $6.4 2.0
PSUs $3.9 1.3

8. Inventories

The components of inventories were as follows:



(in millions)	September 30, 2019		December 31, 2018
Raw materials	$	43.2	$	55.4
Work in process	3.9		4.3
Finished goods	265.4		280.9
Total inventories	$	312.5	$	340.6

(in millions) September 30,
2018 December 31,
2017
Raw materials $ 50.2
$ 38.2
Work in process 4.6
4.1
Finished goods 277.3
211.9
Total inventories $ 332.1
$ 254.2

9. Goodwill and Identifiable Intangible Assets

Goodwill

As more fully described in the Company’s ~~2017~~2018 Annual Report on Form 10-K, we test goodwill for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company performed this annual assessment, on a qualitative basis, as allowed by GAAP, in the second quarter of ~~2018~~2019 and concluded that no impairment existed.

Changes in the net carrying amount of goodwill by segment were as follows:



(in millions)	ACCO Brands North America		ACCO Brands EMEA			ACCO Brands International			Total
(in millions)	ACCO Brands North America		ACCO Brands EMEA			ACCO Brands International			Total
Balance at December 31, 2018	$	375.6	$	165.6		$	167.7		$	708.9
Acquisitions	—		—			12.3			12.3
Foreign currency translation	—		(10.4		)	(1.1		)	(11.5		)
Balance at September 30, 2019	$	375.6	$	155.2		$	178.9		$	709.7

(in millions) ACCO
Brands
North America ACCO
Brands
EMEA ACCO
Brands
International Total

Balance at December 31, 2017 $ 375.6
$ 129.4
$ 165.3
$ 670.3
GOBA Acquisition —
—
2.0
2.0
Foreign currency translation —
12.0
0.1
12.1
Balance at September 30, 2018 $ 375.6
$ 141.4
$ 167.4
$ 684.4

The goodwill balance is net of $215.1 million of accumulated impairment ~~losses.~~losses, which occurred prior to December 31, 2016.

Identifiable Intangible Assets

Foroni Acquisition

The preliminary valuation of identifiable intangible assets of ~~$10.5~~$10.2 million acquired in the ~~GOBA~~Foroni Acquisition ~~include~~includes an amortizable trade name, ~~and amortizable customer relationships,~~"Foroni^®," which ~~have~~has been recorded at ~~their preliminary~~its estimated fair values. We are continuing our review of our fair value estimate of assets acquired and liabilities assumed during the measurement period, which will conclude as soon as we receive the information we are seeking about facts and circumstances that existed as of the acquisition date, or learn that more information is not available.value. The ~~preliminary~~ fair value of the trade ~~names~~name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The ~~preliminary~~Foroni^® trade name is expected to be amortized over 23 years on a straight-line basis.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Cumberland Asset Acquisition

The valuation of identifiable intangible assets of $3.2 million acquired in the Cumberland Asset Acquisition includes an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows.

The amortizable trade name is expected to be amortized over 10 years on a straight-line basis while the customer relationships will be amortized on an accelerated basis over 7 years from January 31, 2019, the date the Cumberland assets were acquired by the Company. The allocation of the identifiable intangibles acquired in the Cumberland Asset Acquisition was as follows:



(in millions)	Fair Value		Remaining Useful Life Ranges
Trade name - amortizable	$	0.8	10 Years
Customer relationships	2.4		7 Years
Total identifiable intangibles acquired	$	3.2

GOBA Acquisition

The valuation of identifiable intangible assets of $10.3 million acquired in the GOBA Acquisition includes an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows.

The amortizable trade name is expected to be amortized over 15 years on a straight-line basis, while the customer relationships will be amortized on an accelerated basis over 10 years from July 2, 2018, the date GOBA was acquired by the Company. The allocation of the identifiable intangibles acquired in the GOBA Acquisition was as follows:



(in millions)	Fair Value		Remaining Useful Life Ranges
Trade name - amortizable	$	3.8	15 Years
Customer relationships	6.5		10 Years
Total identifiable intangibles acquired	$	10.3

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The amortizable trade name and the customer relationships are expected to be amortized over 15 years and 10 years, respectively, on a straight-line basis, from July 2, 2018, the date GOBA was acquired by the Company. The preliminary allocations of the acquired identifiable intangibles acquired in the GOBA Acquisition are as follows:

(in millions) Fair Value Remaining Useful Life Ranges
Trade name - amortizable $ 3.5
15 Years
Customer relationships 7.0
10 Years
Total identifiable intangibles acquired $ 10.5

~~The~~Company's gross carrying value and accumulated amortization by class of identifiable intangible assets as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018, was as follows:


	September 30, 2018								December 31, 2017								September 30, 2019								December 31, 2018
(in millions)	Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value
Indefinite-lived intangible assets:
Trade names	$	472.5	$	(44.5	)	⁽¹⁾	$	428.0	$	599.5	$	(44.5	)	⁽¹⁾	$	555.0	$	462.8	$	(44.5	)	⁽¹⁾	$	418.3	$	471.7	$	(44.5	)	⁽¹⁾	$	427.2
Amortizable intangible assets:
Trade names	308.0		(67.4		)		240.6		195.3		(59.4		)		135.9		312.9		(80.0		)		232.9		306.0		(70.5		)		235.5
Customer and contractual relationships	244.2		(115.7		)		128.5		243.0		(99.3		)		143.7		236.9		(135.4		)		101.5		240.2		(120.5		)		119.7
Patents	5.7		(0.8		)		4.9		5.8		(0.5		)		5.3		5.3		(1.2		)		4.1		5.5		(0.9		)		4.6
Subtotal	557.9		(183.9		)		374.0		444.1		(159.2		)		284.9		555.1		(216.6		)		338.5		551.7		(191.9		)		359.8
Total identifiable intangibles	$	1,030.4	$	(228.4	)		$	802.0	$	1,043.6	$	(203.7	)		$	839.9	$	1,017.9	$	(261.1	)		$	756.8	$	1,023.4	$	(236.4	)		$	787.0


(1)	Accumulated amortization prior to the adoption of authoritative guidance on goodwill and ~~indefinite-lived~~other intangible assets, at which time further amortization ceased.

The Company’s intangible amortization expense was ~~$9.4~~$8.6 million and $9.4 million for the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$27.2~~$26.8 million and ~~$26.4~~$27.2 million for the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

Estimated amortization expense for amortizable intangible assets as of September 30, ~~2018~~2019, for the current year and the next five years are as follows:



(in millions)	2019		2020		2021		2022		2023		2024
Estimated amortization expense⁽²⁾	$	35.7	$	32.4	$	28.7	$	25.1	$	22.9	$	21.2

(in millions) 2018 2019 2020 2021 2022 2023
Estimated amortization expense⁽²⁾
$ 36.7
$ 35.5
$ 32.0
$ 28.5
$ 25.0
$ 22.9


(2)	Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events.

We test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a qualitative basis, as allowed by GAAP, ~~for the majority of indefinite-lived trade names~~ in the second quarter of ~~2018~~2019 and concluded that no impairment existed. ~~For one~~

10. Restructuring

The Company recorded $2.1 million and $4.8 million of restructuring expense for the three and nine months ended September 30, 2019, respectively. The restructuring expenses are primarily for severance costs related to cost reduction initiatives in our ~~indefinite-lived trade names that is not substantially above its carrying value, Mead~~^®~~, we also performed a quantitative test in the second quarter of 2018. A 1.5% long-term growth rate~~North America and ~~an 11.5% discount rate were used. We concluded that the Mead~~^® ~~trade name was not impaired.~~International segments.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~As of June 30, 2018, we changed the indefinite-lived Mead~~^® ~~trade name to an amortizable intangible asset. The change was made as a result of decisions regarding the Company's future use of the trade name. The Company began amortizing the Mead~~^® ~~trade name on a straight-line basis over a life of 30 years on July 1, 2018.~~

~~10. Restructuring~~

The Company recorded restructuring expenses for the three and nine months ended September 30, 2018 of $1.1 million and $7.9 million, respectively, primarily related to additional changes in the operating structure of the North America segment and the continued integration of Esselte within the EMEA segment. During the fourth quarter of 2018, we expect to record additional restructuring charges of $3.1 million in our ACCO Brands North America segment. This includes $2.8 million of severance expenses and $0.3 million in exit costs for some of our leased facilities.

~~For the three and nine months ended September 30, 2017, we recorded restructuring charges of $2.3 million and $16.1 million, respectively.~~

The summary of the activity in the restructuring ~~account~~liability for the nine months ended September 30, 2019, was as follows:



(in millions)	Balance at December 31, 2018		Provision		Cash Expenditures			Non-cash Items/ Currency Change			Balance at September 30, 2019
Employee termination costs⁽¹⁾	$	7.9	$	4.1	$	(7.2	)	$	(0.2	)	$	4.6
Termination of lease agreements⁽²⁾	1.8		0.1		(1.6		)	—			0.3
Other⁽³⁾	—		0.6		(0.1		)	—			0.5
Total restructuring liability	$	9.7	$	4.8	$	(8.9	)	$	(0.2	)	$	5.4

(1) We expect the remaining $4.6 million employee termination costs to be substantially paid in the next 12 months.

(2) We expect the remaining $0.3 million termination of lease costs to be substantially paid in the next 6 months.

(3) We expect the remaining $0.5 million of other costs to be substantially paid in the next 6 months.

The summary of the activity in the restructuring liability for the nine months ended September 30, 2018, was as follows:



(in millions)	Balance at December 31, 2017		Provision		Cash Expenditures			Non-cash Items/ Currency Change			Balance at September 30, 2018
Employee termination costs	$	12.0	$	4.2	$	(8.7	)	$	(0.4	)	$	7.1
Termination of lease agreements	0.8		3.5		(1.6		)	(0.1		)	2.6
Other	0.5		0.2		(0.5		)	—			0.2
Total restructuring liability	$	13.3	$	7.9	$	(10.8	)	$	(0.5	)	$	9.9

(in millions) Balance at December 31, 2017 Provision Cash
Expenditures Non-cash
Items/
Currency Change Balance at September 30, 2018
Employee termination costs⁽¹⁾
$ 12.0
$ 4.2
$ (8.7 ) $ (0.4 ) $ 7.1
Termination of lease agreements⁽²⁾
0.8
3.5
(1.6 ) (0.1 ) 2.6
Other⁽³⁾
0.5
0.2
(0.5 ) —
0.2
Total restructuring liability $ 13.3
$ 7.9
$ (10.8 ) $ (0.5 ) $ 9.9

~~(1) We expect~~11. Income Taxes

For the ~~remaining $7.1 million employee termination costs to be substantially paid in the next nine months.~~

~~(2) We expect the remaining $2.6 million termination of lease costs to be substantially paid in the next nine months.~~

~~(3) We expect the remaining $0.2 million of other costs, principally contract exit costs, to be paid in the next~~ three ~~months.~~

~~The summary of the activity in the restructuring account for the nine~~ months ended September 30, ~~2017 was as follows:~~

(in millions) Balance at December 31, 2016 Esselte Acquisition (4) Provision Cash
Expenditures Non-cash
Items/
Currency Change Balance at September 30, 2017
Employee termination costs $ 1.4
$ 1.4
$ 13.2
$ (5.2 ) $ 0.5
$ 11.3
Termination of lease agreements 0.1
2.0
1.9
(1.2 ) 0.2
3.0
Other —
0.1
1.0
(0.3 ) —
0.8
Total restructuring liability $ 1.5
$ 3.5
$ 16.1
$ (6.7 ) $ 0.7
$ 15.1

~~(4) Restructuring liabilities assumed in the Esselte Acquisition.~~

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

~~11. Income Taxes~~

~~The reconciliation of income taxes for the three and nine months ended September 30, 2018 and 2017, computed at the U.S. federal statutory~~2019, we recorded an income tax expense of $12.2 million on income before taxes of $40.2 million, for an effective rate ~~compared to our effective income tax rate, was as follows:~~of 30.3 percent.

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
Income tax expense computed at U.S. statutory income tax rate (21% and 35%, respectively) $ 10.3
$ 17.5
$ 20.8
$ 30.8
Interest on Brazilian Tax Assessment 0.3
0.5
0.9
1.8
Partial release of reserve for the Brazilian Tax Assessment —
—
(5.6 ) —
Excess tax benefit from stock-based compensation —
—
(2.6 ) (5.5 )
Net operating losses not benefited 0.8
—
2.8
—
Foreign tax rate change —
—
3.9
—
Foreign earnings taxed at higher (lower) rate 3.3
—
5.7
(2.6 )
Non-deductible expenses related to acquisitions —
1.1
—
1.7
Miscellaneous tax expense (benefit) (1.3 ) 0.1
1.5
4.1
Income tax expense as reported $ 13.4
$ 19.2
$ 27.4
$ 30.3
Effective tax rate 27.3 % 38.6 % 27.6 % 34.4 %

For the three months ended September 30, 2018, we recorded an income tax expense of $13.4 million on income before taxes of $49.0 ~~million.~~million, for an effective rate of 27.3 percent.

For the nine months ended September 30, 2019, we recorded an income tax expense of $38.1 million on income before taxes of $101.4 million, for an effective rate of 37.6 percent. The ~~lower~~increase in effective tax rate for the ~~three months ended September 30, 2018 was~~period is primarily ~~attributable~~due to ~~positive impacts~~the Company increasing its reserves for uncertain tax positions during the first quarter of 2019, in connection with the Brazil Tax Assessments (see Brazil Tax Assessments below) in the amount of $5.6 million, the recording of deferred state taxes on unremitted non-U.S. earnings in the amount of $0.8 million and $1.6 million of Brazilian income taxes accrued on a contingent gain resulting from a reduction of the ~~U.S.~~Brazilian indirect tax base (see "Note 18. Commitments and Contingencies - Brazil Tax ~~Act (lower tax rate partially offset by global intangible low-taxed income ("GILTI"~~Credits") ~~taxes) and foreign tax refunds.~~.

For the nine months ended September 30, 2018, we recorded an income tax expense of $27.4 million on income before taxes of $99.1 ~~million.~~million, for an effective rate of 27.6 percent. The ~~lower effective~~ tax ~~rate~~expense for the nine months ended September 30, 2018 ~~was due to a $5.6 million~~included an excess tax benefit resulting from the realization of stock-based compensation related tax deductions, the partial release of the reserve for the uncertain tax positions in connection with the Brazil Tax ~~Assessment (see Income Tax Assessment - Tilibra)~~Assessments resulting from the expiration of the statute of ~~limitations~~limitation for the 2011 tax year, ~~the~~and positive impacts attributable to the ~~U.S.~~ Tax Cuts and Jobs Act (the "U.S. Tax Act") and foreign tax refunds. This was partially offset by the revaluation of the deferred tax assets and liabilities resulting from the decrease in the Swedish corporate tax rate.

For the nine months ended September 30, 2017, we recorded an income tax expense of $30.3 million on income before taxes of $88.0 million. The low effective tax rate for the nine months ended September 30, 2017 was primarily due to the excess tax benefit of $5.5 million from the realization of stock-based compensation related tax deductions.

The U.S. federal statute of limitations remains open for the years 2015 and forward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 2 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2014 forward), Brazil (2013 forward), ~~Brazil (2012 forward),~~ Canada ~~(2010~~(2014 forward), Germany ~~(2011~~(2014 forward), Sweden ~~(2011~~(2013 forward) and the U.K. ~~(2016~~(2017 forward). We are currently under examination in certain foreign jurisdictions.

Immaterial Out-of-Period Adjustment

The $5.6 million tax expense resulting from the increase in the reserve related to uncertain tax positions in connection with the Brazil Tax ~~Reform~~

~~On December 22, 2017,~~Assessments that was recorded in the ~~U.S. Tax Act was signed into law. The U.S. Tax Act made broad and complex changes to~~first quarter of 2019 should properly have been recorded in 2018 when the U.S. tax code, including, but not limited to: (i) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax on certain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); (iii) bonus depreciation that will allow for full expensing of qualified property; (iv) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (v) a new provision designed to tax global intangible low-taxed income; (vi) the repeal of the domestic production activity deductions; (vii) limitations on the deductibility of certain executive compensation; (viii) limitations on the use of foreign tax credits to reduce U.S. income tax liability; and (ix) a new provision that allows a domestic corporation an immediate deduction for a portion of its foreign derived intangible income.

~~The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects~~

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Company decided to appeal an administrative decision to the judicial level. The impact of recording this out-of-period adjustment to our Consolidated Statements of Income in the ~~U.S. Tax Act. SAB 118 provides~~three months ended March 31, 2019, is a ~~measurement period that should not extend beyond one year from the enactment date for companies to complete the related accounting under ASC 740,~~ ~~Accounting for Income Taxes. In accordance with SAB 118, a company must reflect the~~$5.6 million increase in our income tax ~~effects of those aspects of~~expense and a $5.6 million decrease to our Net Income, resulting in a Net Loss for the U.S. Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for a certain income tax effect of the U.S. Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the U.S. Tax Act.

~~The Company’s accounting for certain components of the U.S. Tax Act is not complete. However,~~three months ended March 31, 2019; the Company ~~was able~~has concluded that this amount would not have been material to ~~make reasonable estimates of~~its Net Income for the ~~effects and recorded provisional estimates for these items. Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, during the year~~twelve months ended December 31, ~~2017, we recorded a net tax benefit totaling $25.7 million related to our provisional estimate of~~2018, or its expected Net Income for the twelve months ended December 31, 2019. Further, the impact of the ~~U.S. Tax Act. The benefit consists~~correction was not material to either our Condensed Consolidated Balance Sheets, our Condensed Consolidated Statements of ~~an expense~~Cash Flows or our Consolidated Statement of ~~$24.0 million, net of foreign tax credit carryforwards of $14.0 million, for the one-time Transition Toll Tax and a net benefit of $49.7 million~~Stockholders' Equity. This amount is not expected to be paid in ~~connection with the revaluation of the deferred tax assets and liabilities resulting from the decrease~~cash in the ~~U.S. corporate tax rate.~~

During the nine months ended September 30, 2018, we have made no adjustments to the provisional amounts recorded at December 31, 2017. However, the ultimate impact of the U.S. Tax Act may differ from the current estimates, possibly materially, due to changes in interpretationsforeseeable future, and ~~assumptions the Company has made, future guidance that may~~would only be issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, or actions the Company may take. Adjustments to the provisional amounts may materially affect our provision for income taxes and effective tax ratepaid in the ~~period~~event that we do not ultimately prevail in ~~which~~ the ~~adjustments are made. Accounting for the tax effects of the U.S.~~case.

Brazil Tax ~~Act will be completed prior to December 31, 2018.~~Assessments

~~Income Tax Assessment - Tilibra~~

In connection with our May 1, 2012, acquisition of the Mead Consumer and Office Products ~~Business~~business ("Mead C&OP"), we assumed all of the tax liabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment ~~(the "Brazilian Tax Assessment")~~ against Tilibra, ~~which challenged~~challenging the tax deduction of goodwill from Tilibra's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment" and together with the First Assessment, the "Brazil Tax Assessments"). Tilibra is disputing both of the tax assessments.

The final administrative appeal of the Second Assessment was decided against the Company in 2017. ~~We intend~~In 2018, the Company decided to ~~challenge~~appeal this decision to the judicial level. In the event we do not prevail at the judicial level, the Company will be required to pay an additional amount representing attorneys' costs and fees. Accordingly, in ~~court.~~the first quarter of 2019, the Company recorded an additional reserve in the amount of $5.6 million reflecting the increased liability, bringing the total reserve to $27.5 million for the Second Assessment. In connection with the judicial challenge, we ~~are~~were required to ~~post~~provide security to guarantee payment of the Second Assessment, ~~which represents $21.0 million of the current reserve,~~ should we not prevail. The First Assessment is still being challenged through established administrative procedures.

We believe we have meritorious defenses and intend to vigorously contest ~~these matters;~~both of the assessments; however, there can be no assurances that we will ultimately prevail. The ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a number of years. In addition, Tilibra's 2012 tax year remains open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill for 2012. The time limit for issuing an assessment for 2012 will expire in January 2019. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, we consider the outcome of ~~this dispute~~these disputes to be uncertain. Since it is not more likely than not that we will prevail, in 2012, we recorded a reserve in the amount of $44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price and which included the 2007-2012 tax years plus penalties and interest through December 2012. Included in this reserve is an assumption of penalties at ~~75%,~~75 percent, which is the standard penalty. While there is a possibility that a penalty of ~~150%~~150 percent could be imposed in connection with the First Assessment, based on the facts in our case and existing precedent, we believe the likelihood of a ~~150%~~150 percent penalty is not more likely than not as of September 30, ~~2018.~~2019. We will continue to actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our ~~case.~~disputes. In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. The time limit for issuing an assessment for 2011 expired in January 2018 and we did not receive an assessment; we ~~have~~ therefore reversed $5.6

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

million of reserves related to 2011 in the first quarter of 2018. During the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we accrued additional interest as a charge to current income tax expense of $0.3 million and ~~$0.5~~$0.3 million, respectively, and for the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we accrued additional interest of $0.9 million and ~~$1.8~~$0.9 million, respectively. At current exchange rates, our accrual through September 30, ~~2018,~~2019, including tax, penalties and interest is ~~$28.4~~$33.4 million.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

12. Earnings per Share

Total outstanding shares as of September 30, ~~2018~~2019 and ~~2017~~2018, were 97.2 million and 102.7 million ~~and~~ ~~106.6 million~~, respectively. Under our stock repurchase program, for the three and nine months ended September 30, ~~2018,~~2019, we repurchased and retired ~~1.9~~2.3 million and ~~6.0~~7.0 million shares, respectively. ~~During~~For the three and nine months ended September 30, ~~2017, we~~2018, the shares repurchased and retired ~~2.7~~were 2.0 million and ~~3.2~~6.0 million, ~~shares,~~ respectively. For ~~each of~~ the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, we acquired ~~0.6~~0.5 million and ~~0.7~~0.6 million shares, respectively, related to tax withholding for share-based compensation.

The calculation of basic earnings per share of common stock is based on the ~~weighted average~~weighted-average number of shares of common stock outstanding in the year, or period, over which they were outstanding. Our calculation of diluted earnings per share of common stock assumes that any shares of common stock outstanding were increased by shares that would be issued upon exercise of those stock awards for which the average market price for the period exceeds the exercise price less the shares that could have been purchased by the Company with the related proceeds, including compensation expense measured but not yet recognized.

Our weighted-average shares outstanding for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 was as follows:



	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2019	2018	2019	2018
Weighted-average number of shares of common stock outstanding - basic	97.6	103.8	100.4	105.6
Stock options	0.4	1.1	0.4	1.1
Restricted stock units	0.9	1.0	1.1	1.2
Weighted-average shares and assumed conversions - diluted	98.9	105.9	101.9	107.9

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
Weighted-average number of shares of common stock outstanding - basic 103.8
108.1
105.6
108.6
Stock options 1.1
1.1
1.1
1.3
Restricted stock units 1.0
1.1
1.2
1.6
Weighted-average shares and assumed conversions - diluted 105.9
110.3
107.9
111.5

Awards of potentially dilutive shares of common stock, which have exercise prices that were higher than the average market price during the period, are not included in the computation of dilutive earnings per share as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2019, the number of anti-dilutive shares was approximately 5.0 million and 4.7 million, respectively, and for the three and nine months ended September 30, 2018, the number of anti-dilutive shares was approximately 3.8 million and 3.6 million, respectively. ~~For the three and nine months ended September 30, 2017, the number of these shares was approximately 3.7 million and 3.1 million, respectively.~~

13. Derivative Financial Instruments

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions. We continually monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged ~~include~~against the U.S. dollar include the Euro, Australian dollar, Canadian dollar, Swedish krona, British pound and Japanese yen. We are subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts. Management continues to monitor the status of our counterparties and will take action, as appropriate, to further manage our counterparty credit risk. There are no credit contingency features in our derivative financial instruments.

When hedge accounting is applicable, on the date we enter into a derivative, the derivative is designated as a hedge of the identified exposure. We measure the effectiveness of our hedging relationships both at hedge inception and on an ongoing basis.

Forward Currency Contracts

We enter into forward foreign currency contracts with third parties to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventory purchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe (the Euro, the Swedish krona and the British pound), Australia, Canada, Brazil, and Mexico.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and New Zealand, and are designated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in ~~AOCI~~Accumulated Other Comprehensive Income ("AOCI") until the contracts are settled and the underlying hedged transactions relating to inventory purchases are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line in the "Consolidated Statements of Income." As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had cash-flow-designated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$108.0~~$103.7 million and ~~$93.5~~$98.7 million, respectively.

Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within "Other (income) expense, ~~(income),~~ net" in the "Consolidated Statements of Income" and are largely offset by the change in the current translated value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extend beyond September ~~2019,~~2020, except for one relating to intercompany loans which extends to December 2020. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$126.8~~$85.5 million and ~~$95.0~~$113.3 million, respectively.

The following table summarizes the fair value of our derivative financial instruments as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:


	Fair Value of Derivative Instruments										Fair Value of Derivative Instruments
	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
(in millions)	Balance Sheet Location	September 30, 2018		December 31, 2017		Balance Sheet Location	September 30, 2018		December 31, 2017		Balance Sheet Location	September 30, 2019		December 31, 2018		Balance Sheet Location	September 30, 2019		December 31, 2018
Derivatives designated as hedging instruments:
Foreign exchange contracts	Other current assets	$	4.2	$	0.5	Other current liabilities	$	—	$	0.5	Other current assets	$	2.0	$	3.3	Other current liabilities	$	0.3	$	0.1
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current assets	0.1		0.4		Other current liabilities	2.7		0.7		Other current assets	—		0.6		Other current liabilities	1.0		1.7
Foreign exchange contracts	Other non-current assets	17.3		24.2		Other non-current liabilities	17.3		24.2		Other non-current assets	1.5		12.7		Other non-current liabilities	1.5		12.7
Total derivatives		$	21.6	$	25.1		$	20.0	$	25.4		$	3.5	$	16.6		$	2.8	$	14.5

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following tables summarize the pre-tax effect of our derivative financial instruments on the condensed consolidated financial statements for the three and nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:


		The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Condensed Consolidated Financial Statements												The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Condensed Consolidated Financial Statements
		Amount of Gain (Loss) Recognized in AOCI (Effective Portion)						Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)					Amount of Gain (Loss) Recognized in AOCI (Effective Portion)					Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)
		Three Months Ended September 30,							Three Months Ended September 30,					Three Months Ended September 30,						Three Months Ended September 30,
(in millions)		2018			2017				2018		2017			2019		2018				2019			2018
Cash flow hedges:
Foreign exchange contracts		$	(3.6	)	$	(2.1	)	Cost of products sold	$	2.6	$	1.9		$	2.7	$	(3.6	)	Cost of products sold	$	(0.7	)	$	2.6

		The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Condensed Consolidated Financial Statements												The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Condensed Consolidated Financial Statements
		Amount of Gain (Loss) Recognized in AOCI (Effective Portion)						Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)					Amount of Gain (Loss) Recognized in AOCI (Effective Portion)					Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)
		Nine Months Ended September 30,							Nine Months Ended September 30,					Nine Months Ended September 30,						Nine Months Ended September 30,
(in millions)		2018			2017				2018		2017			2019		2018				2019			2018
Cash flow hedges:	Cash flow hedges:												Cash flow hedges:
Foreign exchange contracts	Foreign exchange contracts	$	(1.6	)	$	(5.3	)	Cost of products sold	$	5.5	$	0.3	Foreign exchange contracts	$	2.3	$	(1.6	)	Cost of products sold	$	(3.6	)	$	5.5



	The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income
	Location of (Gain) Loss Recognized in Income on Derivatives	Amount of (Gain) Loss Recognized in Income					Amount of (Gain) Loss Recognized in Income
		Three Months Ended September 30,					Nine Months Ended September 30,
(in millions)		2019			2018		2019			2018
Foreign exchange contracts	Other (income) expense, net	$	(0.2	)	$	1.0	$	(0.7	)	$	1.4

The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations
Location of (Gain) Loss Recognized in
Income on Derivatives Amount of (Gain) Loss
Recognized in Income Amount of (Gain) Loss
Recognized in Income
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
Foreign exchange contracts Other expense (income), net $ 1.0
$ 0.5
$ 1.4
$ (0.9 )

14. Fair Value of Financial Instruments

In establishing a fair value, there is a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The basis of the fair value measurement is categorized in three levels, in order of priority, as described below:



Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

We utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

We have determined that our financial assets and liabilities described in "Note 13. Derivative Financial Instruments" are Level 2 in the fair value hierarchy. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



(in millions)	September 30, 2019		December 31, 2018
Assets:
Forward currency contracts	$	3.5	$	16.6
Liabilities:
Forward currency contracts	$	2.8	$	14.5

(in millions) September 30,
2018 December 31,
2017
Assets:
Forward currency contracts $ 21.6
$ 25.1
Liabilities:
Forward currency contracts $ 20.0
$ 25.4

Our forward currency contracts are included in "Other current assets," "Other non-current assets," "Other current liabilities" or "Other non-current ~~liabilities" and do not extend beyond September 2019, except for one relating to intercompany loans which extends to December 2020.~~liabilities." The forward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by banks or foreign currency dealers. As such, these derivative instruments are classified within Level 2.

The fair values of cash and cash equivalents, notes payable to banks, accounts receivable and accounts payable approximate carrying amounts due principally to their short maturities. The carrying amount of total debt was ~~$1,019.4~~$923.5 million and ~~$939.5~~$888.0 million and the estimated fair value of total debt was $~~1,017.0~~936.1 million and $~~951.5~~848.6 million at September 30, ~~2018~~2019 and December 31, ~~2017~~2018, respectively. The fair values are determined from quoted market prices, where available, and from investment bankers using current interest rates considering credit ratings and the remaining time to maturity.

15. Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss) is defined as net (loss) income ~~(loss)~~ and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. The components of, and changes in, accumulated other comprehensive income (loss), net of tax were as follows:



(in millions)	Derivative Financial Instruments			Foreign Currency Adjustments			Unrecognized Pension and Other Post-retirement Benefit Costs			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	2.1		$	(299.2	)	$	(164.6	)	$	(461.7	)
Other comprehensive loss before reclassifications, net of tax	1.4			(22.4		)	3.2			(17.8		)
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax	(2.3		)	—			3.4			1.1
Balance at September 30, 2019	$	1.2		$	(321.6	)	$	(158.0	)	$	(478.4	)

(in millions) Derivative
Financial
Instruments
Foreign
Currency
Adjustments Unrecognized
Pension and Other
Post-retirement
Benefit Costs Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, 2017 $ 0.2
$ (305.4 ) $ (155.9 ) $ (461.1 )
Other comprehensive income (loss) before reclassifications, net of tax (1.1 ) (18.6 ) 2.7
(17.0 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 3.9
—
3.5
7.4
Balance at September 30, 2018 $ 3.0
$ (324.0 ) $ (149.7 ) $ (470.7 )

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017				2019			2018			2019			2018
(in millions)	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Location on Income Statement	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Location on Income Statement
Details about Accumulated Other Comprehensive Income Components													Location on Income Statement													Location on Income Statement
Gain on cash flow hedges:
Gain (loss) on cash flow hedges:
Foreign exchange contracts	$	(2.6	)	$	(1.9	)	$	(5.5	)	$	(0.3	)	Cost of products sold	$	0.7		$	(2.6	)	$	3.6		$	(5.5	)	Cost of products sold
Tax benefit	0.8			0.6			1.6			—			Income tax expense
Tax (expense) benefit														(0.4		)	0.8			(1.3		)	1.6			Income tax expense
Net of tax	$	(1.8	)	$	(1.3	)	$	(3.9	)	$	(0.3	)		$	0.3		$	(1.8	)	$	2.3		$	(3.9	)
Defined benefit plan items:
Amortization of actuarial loss	$	(1.4	)	$	(1.1	)	$	(4.3	)	$	(3.4	)	(1)	$	(1.4	)	$	(1.4	)	$	(3.9	)	$	(4.3	)	(1)
Amortization of prior service cost	(0.1		)	(0.1		)	(0.3		)	(0.3		)	(1)	(0.2		)	(0.1		)	(0.4		)	(0.3		)	(1)
Total before tax	(1.5		)	(1.2		)	(4.6		)	(3.7		)		(1.6		)	(1.5		)	(4.3		)	(4.6		)
Tax benefit	0.4			0.2			1.1			1.0			Income tax expense	0.5			0.4			0.9			1.1			Income tax expense
Net of tax	$	(1.1	)	$	(1.0	)	$	(3.5	)	$	(2.7	)		$	(1.1	)	$	(1.1	)	$	(3.4	)	$	(3.5	)

Total reclassifications for the period, net of tax	$	(2.9	)	$	(2.3	)	$	(7.4	)	$	(3.0	)		$	(0.8	)	$	(2.9	)	$	(1.1	)	$	(7.4	)


(1)	These accumulated other comprehensive income components are included in the computation of net periodic benefit cost for pension and post-retirement plans. See "Note 6. Pension and Other Retiree Benefits" for additional details.

16. Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration we expect to be received in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial in the context of the contract are expensed.

At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. To identify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or implied within the contract or by standard business practices.

Freight and distribution activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations. The Company has chosen to account for shipping and handling activities as a fulfillment activity, and therefore accrues the expense of freight and distribution in "Cost of products sold" when product is shipped.

Service or Extended Maintenance Agreements ("EMAs") As of December 31, 2018, there was $5.0 million of unearned revenue associated with outstanding EMAs, primarily reported in "Other current liabilities." During the three and nine months ended September 30, 2019, $0.8 million and $3.7 million, respectively, of the unearned revenue was recognized. As of September 30, 2019, the amount of unearned revenue was $4.8 million. We expect to recognize approximately $4.2 million of the unearned amount in the next 12 months and $0.6 million in periods beyond the next 12 months.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following tables present our net sales disaggregated by regional geography⁽¹⁾, based upon our reporting business segments and our net sales disaggregated by the timing of revenue recognition for the three and nine months ended September 30, 2019 and 2018:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2019		2018		2019		2018
United States	$	235.8	$	227.6	$	646.4	$	617.7
Canada	36.6		35.8		94.3		94.1
ACCO Brands North America	272.4		263.4		740.7		711.8

ACCO Brands EMEA⁽²⁾	133.1		143.1		407.9		438.1

Australia/N.Z.	37.1		41.4		100.7		118.8
Latin America	52.1		47.6		134.8		106.7
Asia-Pacific	11.0		11.8		34.2		36.5
ACCO Brands International	100.2		100.8		269.7		262.0
Net sales	$	505.7	$	507.3	$	1,418.3	$	1,411.9

(1) Net sales are attributed to geographic areas based on the location of the selling subsidiaries.

(2) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2019		2018		2019		2018
Product and services transferred at a point in time	$	489.8	$	493.3	$	1,370.4	$	1,372.0
Product and services transferred over time	15.9		14.0		47.9		39.9
Net sales	$	505.7	$	507.3	$	1,418.3	$	1,411.9

17. Information on Business Segments

The Company has ~~three~~3 operating business segments each of which is comprised of different geographic regions. The Company's ~~three~~3 segments are as follows:



Operating Segment		Geography
ACCO Brands North America		United States and Canada
ACCO Brands EMEA		Europe, Middle East and Africa
ACCO Brands International		Australia/N.Z., Latin America and Asia-Pacific

Each of the Company's ~~three~~3 operating segments designs, markets, sources, manufactures and sells recognized consumer and other end-user demanded branded products used in businesses, schools and homes. Product designs are tailored based on end-user preferences in each geographic region.

Our product categories include storage and organization; stapling; punching; laminating, binding and shredding machines and related consumable supplies; whiteboards; notebooks; calendars; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and other end-user demanded brands includes both globally and regionally recognized brands.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~ACCO Brands North America~~

~~The ACCO Brands North America segment is comprised of the United States and Canada where the Company is a leading branded supplier of consumer and business products under brands such as AT-A-GLANCE~~^®~~, Five Star~~^®~~, GBC~~^®~~, Hilroy~~^®~~, Kensington~~^®~~, Mead~~^®~~, Quartet~~^®~~, and Swingline~~^®.The ACCO Brands North America segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, and computer accessories, among others, which are primarily used in schools, homes and businesses. The majority of revenue in this segment is related to consumer and home products and is associated with the "back-to-school" season and year-end calendar purchases; we expect sales of consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is faster growing than most business-related products.

~~ACCO Brands EMEA~~

The ACCO Brands EMEA segment is comprised largely of Europe, but also includes export sales to the Middle East and Africa. The Company is a leading branded supplier of consumer and business products under brands such as Derwent^®~~, Esselte~~^®~~, GBC~~^®~~, Kensington~~^®~~, Leitz~~^®~~, NOBO~~^®~~, Rapid~~^®~~, and Rexel~~^®.The ACCO Brands EMEA segment designs, manufactures or sources and distributes storage and organization products (such as lever-arch binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, do-it-yourself tools, and computer accessories, among others, which are primarily used in businesses, homes and schools.

~~ACCO Brands International~~

The ACCO Brands International segment is comprised of Australia/N.Z., Latin America and Asia-Pacific where the Company is a leading branded supplier of consumer and business products under brands such as Artline^®~~, Barrilito~~^®~~, GBC~~^®~~, Kensington~~^®~~, Marbig~~^®~~, Quartet~~^®~~, Rexel~~^®~~, Tilibra~~^®~~, and Wilson Jones~~^®, among others. The ACCO Brands International segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, writing instruments, and janitorial supplies, among others, which are primarily used in schools, businesses and homes. The majority of revenue in this segment is related to consumer products and is associated with the "back-to-school" season and year-end calendar purchases; we expect sales of consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is faster growing than most business-related products.

Customers

We distribute our products through a wide variety of retail and commercial channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization.

ACCO Brands North America

The ACCO Brands North America segment is comprised of the United States and Canada where the Company is a leading branded supplier of consumer and business products under brands such as AT-A-GLANCE^®, Five Star^®, GBC^®, Hilroy^®, Kensington^®, Mead^®, Quartet^®, and Swingline^®.The ACCO Brands North America segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, and computer accessories, among others, which are primarily used in schools, homes and businesses. The majority of revenue in this segment is related to consumer and home products and is associated with the "back-to-school" season and year-end calendar purchases. We expect sales of consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is faster growing than most business-related products.

ACCO Brands EMEA

The ACCO Brands EMEA segment is comprised largely of Europe, but also includes export sales to the Middle East and Africa. The Company is a leading branded supplier of consumer and business products under brands such as Derwent^®, Esselte^®, GBC^®, Kensington^®, Leitz^®, NOBO^®, Rapid^®, and Rexel^®.The ACCO Brands EMEA segment designs, manufactures or sources and distributes storage and organization products (such as lever-arch binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, do-it-yourself tools, and computer accessories, among others, which are primarily used in businesses, homes and schools.

ACCO Brands International

The ACCO Brands International segment is comprised of Australia/N.Z., Latin America and Asia-Pacific where the Company is a leading branded supplier of consumer and business products under brands such as Artline^®, Barrilito^®, Foroni^®, GBC^®, Kensington^®, Marbig^®, Quartet^®, Rexel^®, Tilibra^®, and Wilson Jones^®, among others. The ACCO Brands International segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, writing instruments, and janitorial supplies, among others, which are primarily used in schools, businesses and homes. The majority of revenue in this segment is related to consumer products and is associated with the "back-to-school" season and year-end calendar purchases. We expect sales of consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is faster growing than most business-related products.

Net sales by business segment for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2019		2018		2019		2018
ACCO Brands North America	$	272.4	$	263.4	$	740.7	$	711.8
ACCO Brands EMEA	133.1		143.1		407.9		438.1
ACCO Brands International	100.2		100.8		269.7		262.0
Net sales	$	505.7	$	507.3	$	1,418.3	$	1,411.9

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018 2017 2018 2017
ACCO Brands North America $ 263.4
$ 290.3
$ 711.8
$ 745.8
ACCO Brands EMEA 143.1
140.3
438.1
365.3
ACCO Brands International 100.8
101.6
262.0
270.9
Net sales $ 507.3
$ 532.2
$ 1,411.9
$ 1,382.0

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Operating income by business segment for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017			2019			2018			2019			2018
ACCO Brands North America	$	33.7		$	49.6		$	88.1		$	107.1		$	33.7		$	33.7		$	101.1		$	88.1
ACCO Brands EMEA	14.6			7.8			37.1			10.8			13.8			14.6			37.1			37.1
ACCO Brands International	16.1			11.2			25.2			25.3			10.8			16.1			20.5			25.2
Segment operating income	64.4			68.6			150.4			143.2			58.3			64.4			158.7			150.4
Corporate	(6.9		)	(11.9		)	(29.4		)	(36.0		)	(9.5		)	(6.9		)	(30.6		)	(29.4		)
Operating income⁽¹⁾	57.5			56.7			121.0			107.2			48.8			57.5			128.1			121.0
Interest expense	11.6			10.7			30.9			31.3			11.5			11.6			33.6			30.9
Interest income	(1.1		)	(1.6		)	(3.5		)	(4.9		)	(0.7		)	(1.1		)	(2.9		)	(3.5		)
Non-operating pension income	(2.6		)	(2.0		)	(7.1		)	(6.2		)	(1.3		)	(2.6		)	(4.1		)	(7.1		)
Other expense (income), net	0.6			(0.2		)	1.6			(1.0		)
Other (income) expense, net													(0.9		)	0.6			0.1			1.6
Income before income tax	$	49.0		$	49.8		$	99.1		$	88.0		$	40.2		$	49.0		$	101.4		$	99.1


(1)	Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less selling, general and administrative expenses; iv) less amortization of intangibles; and v) less restructuring charges.

~~17.~~18. Commitments and Contingencies

Pending Litigation - Brazil Tax ~~Assessment~~Assessments

In connection with our May 1, 2012, acquisition of the Mead C&OP business, we assumed all of the tax liabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). For further information, see "Note 11. Income Taxes - ~~Income~~Brazil Tax ~~Assessment - Tilibra~~Assessments" for details on tax assessments issued by the FRD against Tilibra ~~which challenged~~challenging the tax deduction of goodwill from Tilibra's taxable income for the years 2007 through 2010. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.

Brazil Tax Credits

In March 2017, the Supreme Court of Brazil ruled against the Brazilian tax authority in a leading case related to the computation of certain indirect taxes. The Supreme Court ruled that the indirect tax base should not include a value-added tax known as "ICMS." The Supreme Court decision, in principle, affects all applicable judicial proceedings in progress, and reduces future indirect taxes on our Brazilian subsidiary, Tilibra. However, the Brazilian tax authority has filed an appeal seeking clarification of certain matters, including the amount by which taxpayers would be entitled to reduce their indirect tax base (i.e. the gross ICMS collected or the net ICMS paid). The appeal also requests a modulation of the decision’s effects, which may limit its retrospective impact on taxpayers, including Tilibra.

Tilibra has paid and continues to pay these indirect taxes on a tax base which includes the gross ICMS collected. It has also filed legal actions in Brazil to request reimbursement of these excess tax payments by way of future credits ("Tax Credits") and for permission to exclude the gross ICMS collected from the tax base in future periods. Tilibra’s legal actions cover various time periods and some have been finally decided in a court of law in favor of Tilibra while others are still pending a final decision.

Due to the uncertainties associated with the scope of the application of the Brazilian Supreme Court’s ruling, taking into account the Brazilian tax authority’s appeal and request for modulation, the Company is treating the potential recovery resulting from the Tax Credits as a contingent gain and intends to record as income only the amount of Tax Credits actually realized in the periods monetized. As such, the Company will recognize income when Tilibra receives a cash flow benefit from applying the Tax Credits against various taxes payable in Brazil. The benefit of the Tax Credits realized by the Company will be recorded in the Consolidated Statements of Income in the line item "Other (income) expense, net."

Tilibra has Tax Credits in the amount of $4.3 million which it reasonably expects to offset against Brazilian taxes in the fourth quarter of 2019. This represents the amount of Tax Credits for the periods for which Tilibra has received favorable final

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

court decisions and assumes that only the net amount of ICMS paid can be excluded from the tax base. The value of these Tax Credits was recorded as a gain in Tilibra’s local statutory accounts during the third quarter of 2019, resulting in Brazilian federal taxes payable of approximately $1.6 million.

Final decisions in the remaining legal actions Tilibra has filed may result in additional Tax Credits that could be monetized in future periods. Further, a favorable decision in the leading case by the Brazilian Supreme Court on the methodology to compute the Tax Credits (i.e. gross ICMS collected) would result in additional Tax Credits being available to Tilibra. The amount of these additional Tax Credits may be material.

Foroni has also filed legal actions in Brazil, which seek to recover these excess indirect tax payments made prior to the acquisition by Tilibra. The Company also intends to recognize income for Tax Credits from Foroni when Foroni receives a cash flow benefit from applying such Tax Credits against various taxes payable in Brazil. Any net cash benefit recognized as a result of Tax Credits arising from periods prior to August 1, 2019, must be remitted to the former owners of Foroni in accordance with the terms of the quota purchase agreement.

Other Pending Litigation

We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement and employee terminations as well as other claims incidental to our business. In addition, we may be unaware of third party claims of intellectual property infringement relating to our technology, brands or products and we may face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming and might require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale of certain of our products.

It is the opinion of management that, ~~(other~~other than the ~~Brazilian~~Brazil Tax ~~Assessment)~~Assessments, the ultimate resolution of currently outstanding matters will not have a material adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further, future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.

Environmental

We are subject to national, state, provincial and/or local environmental laws and regulations concerning the discharge of materials into the environment and the handling, disposal and clean-up of waste materials and otherwise relating to the protection of the environment. This includes environmental laws and regulations that affect the design and composition of certain of our products. It is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. In the opinion of our management, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material adverse effect upon our capital expenditures, financial condition and results of operations or competitive position.

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

~~18.~~19. Subsequent Events

Dividends

On October ~~30, 2018,~~29, 2019, the Company's Board of Directors declared a quarterly cash dividend of ~~$0.06~~6.5¢ cent per share on its common ~~stock.~~stock, representing an increase of 8.3 percent from 6.0¢ cent in the prior quarter. The dividend is payable on December ~~19, 2018~~18, 2019 to stockholders of record as of the close of business on November ~~30, 2018.~~29, 2019. The declaration and payment of future dividends will be at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results of operations, cash flows, debt covenant compliance, anticipated liquidity needs, and other factors.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 should be read in conjunction with the unaudited condensed consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein.

Overview of the Company

ACCO Brands is a designer, marketer and manufacturer of recognized consumer and other end-user demanded brands used in businesses, schools, and homes. Our widely known brands include AT-A-GLANCE^®, Barrilito^®, Derwent^®, Esselte^®, Five Star^®, Foroni^®, GBC^®, Hilroy^®, Kensington^®,Leitz^®, Marbig^®, Mead^®, NOBO^®, Quartet^®, Rapid^®, Rexel^®, Swingline^®, Tilibra^® and Wilson Jones^®. More than ~~80%~~75 percent of our net sales come from brands that occupy the ~~number-one~~No. 1 or ~~number-two positions~~No. 2 position in the select product categories in which we compete. We distribute our products through a wide variety of retail and commercial channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independent office product dealers; office superstores; wholesalers; and contract stationers. Our products are sold primarily in the U.S., Europe, Australia, Canada, Brazil and Mexico. For the year ended December 31, ~~2017,~~2018, approximately ~~55%~~42 percent of our net sales were ~~outside~~in the U.S.~~, up~~; down from ~~43%~~45 percent in ~~2016.~~2017. This ~~increase~~decrease was primarily the result of the Esselte and ~~Pelikan Artline~~GOBA acquisitions, which further ~~extended~~expanded our ~~geographic reach.~~international business.

~~Over the past several years~~Our strategy is to grow our global portfolio of consumer brands, increase our presence in faster growing geographies and channels and diversify our customer base. We plan to supplement organic growth globally with strategic acquisitions in both existing and adjacent product categories. We continue to focus on strong free cash flow, as well as leveraging our cost structure through synergies and productivity savings to drive long-term profit improvement.

In furtherance of our strategy, we have transformed our business by ~~divesting certain non-core commercially-oriented product lines,~~ acquiring companies with consumer and other end-user demanded brands, and by continuing to diversify our distribution channels. In 2012, we acquired the Mead Consumer and Office Products ~~business ("Mead C&OP"), which~~business. That acquisition substantially increased our presence in North America and Brazil in school and calendar products with well-known consumer brands. In 2016, we purchased the remaining equity interest in Pelikan Artline from our joint venture ~~partner, which~~partner. That purchase enhanced our competitive position in school and business products in Australia and New Zealand and added new ~~consumer~~ categories, including writing instruments and janitorial supplies. In early 2017, we acquired Esselte Group Holdings AB ("Esselte"), which more than doubled our presence in ~~Europe and~~Europe. The purchase of Esselte added several iconic business brands, a significant base of independent dealer customers, and a new product category of do-it-yourself hardware tools. ~~Recently,~~In 2018, we completed the acquisition ~~(the "GOBA Acquisition")~~ of GOBA Internacional, S.A. de C.V. ~~("GOBA") on July 2, 2018. See below.~~in Mexico to extend our presence into new categories. Recently, we completed the acquisition of Indústria Gráfica Foroni Ltda. in Brazil, which expanded our market-leading presence. Together these acquisitions have meaningfully expanded our portfolio of well-known end-user demanded ~~brands,~~brands; enhanced our competitive position from both a product and channel perspective, and added scale to our ~~business~~ operations.

Today ~~our Company~~ACCO Brands is a global enterprise focused on developing innovative branded consumer products for use in businesses, schools and homes.

We believe our leading product category positions provide the scale to enable us to invest in marketing and product innovation to drive profitable growth. WeOver the long term, we expect to derive much of our growth ~~over the long term, in~~from faster-growing ~~emerging~~ geographies such as Latin America and parts of Asia, the Middle East and Eastern ~~Europe, which~~Europe. These areas exhibit ~~stronger~~a growing demand for our product ~~categories than in developed markets.~~categories. In all of our markets, we see opportunities ~~to grow~~for sales growth through share gains, channel expansion and innovative products. ~~We plan to supplement organic growth globally with strategic acquisitions in both existing and adjacent product categories.~~

Acquisitions

Indústria Gráfica Foroni Ltda Acquisition

Effective August 1, 2019, we completed the acquisition (the "Foroni Acquisition") of Indústria Gráfica Foroni Ltda. ("Foroni"), a leading provider of Foroni^®branded notebooks and paper-based school and office products in Brazil. The preliminary purchase price was $42.1 million, and is subject to working capital and other adjustments. The Foroni Acquisition advances our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base. The results of Foroni are included in the ACCO Brands International segment from August 1, 2019.

The results for the three and nine months ended September 30, 2019, include the results of Foroni for two months.

GOBA Internacional, S.A. de C.V. Acquisition

~~Esselte Group Holdings AB Acquisition~~

~~On January 31, 2017, the Company completed the acquisition of Esselte (the "Esselte Acquisition"). Accordingly,~~The nine months ended September 30, 2019, include the results

of ~~Esselte~~GOBA in all months, while only three months are included in the Company's condensed consolidated financial statements from February 1, 2017 forward and are reported in all three of the Company's segments, but primarily in the ACCO Brands EMEA segment. As a result of the acquisition of Esselte, ACCO Brands became a leading European manufacturer and marketer of branded consumer and office products. The Esselte Acquisition added the Leitz^®~~, Rapid~~^® ~~and Esselte~~^® brands in the storage and organization, stapling, punching, business machines and do-it-yourself tools product categories to the Company's portfolio. The combination improved ACCO Brands’ scale and enhanced its position as an industry leader in Europe.nine months ended September 30, 2018.

For further information on the Foroni and GOBA acquisitions, see "Note 3. Acquisitions" to the condensed consolidated financial statements contained in Item 1. of this report.

~~OVERVIEW OF PERFORMANCE~~Foreign Exchange Rates

~~Net~~The quarterly and year-to-date average foreign exchange rates have declined relative to the prior-year period for most of our major currencies relative to the U.S. dollar as detailed below:



	2019 3^rdQTR Average Versus 2018 3^rd QTR Average	2019 YTD Average Versus 2018 YTD Average
Currency	Increase/(Decline)	Increase/(Decline)
Euro	(4)%	(6)%
Australian dollar	(6)%	(8)%
Canadian dollar	(1)%	(3)%
Brazilian real	—%	(8)%
Swedish krona	(7)%	(9)%
British pound	(5)%	(6)%
Mexican peso	(2)%	(1)%
Japanese yen	3%	1%

Overview of Performance

For the three months ended September 30, 2019, net sales declined slightly due to negative foreign exchange of $9.7 million. The acquisition of Foroni contributed $5.7 million in net sales. Comparable net sales, excluding foreign exchange and Foroni were up 0.5 percent with strong sales in North America, partially offset by weakness in EMEA and International. Operating income declined 15.1 percent, primarily due to lower gross margins in our EMEA and International segments and higher SG&A expenses. Foreign exchange further negatively impacted our operating income by $1.1 million.

Operating cash flow for the three months ended September 30, ~~2018, decreased 5% primarily~~2019, was $190.8 million, which was significantly higher than last year's operating cash flow of $91.2 million. The $99.6 million year-over-year improvement was due to ~~lower sales~~front loading of payments in the U.S from lower wholesaler purchases, the earlier timing of back-to-school shipments and reduced sales of calendar products, which offset growth in EMEA. Operating income increased 1% due to lower restructuring and integration charges in the current year as well as lower management incentive compensation expenses, which offset lower sales, adverse mix and inflation in the U.S. and foreign exchange. The lower management incentive compensation expenses resulted from the release of accruals based on our lower performance expectations for 2018.

~~Our financial results for the three months ended~~ ~~September 30, 2018, were impacted by the following key factors:~~

We saw lower sales in our North America segment primarily due to declines with large wholesale customers. Our gross profit and margin were also adversely impacted by customer and product mix including the impact from these lost sales. In particular, the proposed acquisition of Essendant by Staples, which if completed will bring together two of our large U.S. customers, and the acquisition of U. S. independent dealers by both Staples and Office Depot, is creating substantial uncertainty and disruption in the wholesaler and independent dealer channels in the U.S. which has and will continue to adversely impact our customers' buying patterns, resulting in lower sales to these channels and accompanying profit erosion. We expect this trend to continue until the uncertainties in these channels are resolved and the situation stabilizes.

Inflationary increases in input costs in the North America segment, including the cost of paper, steel, aluminum, transportation and increased tariffs, adversely impacted our cost of products sold and gross profit margin, particularly during the thirdfirst quarter of 2018. We currently expect these inflationary trends to continue with increasing adverse impact in coming quarters, particularly from announced tariff increases in January 2019. We have implemented a price increase2019 for inventory purchased in the fourth quarter of 2018 to secure supply and partially ~~offset these cost increases. We plan to raise prices again in early 2019, which we expect to fully offset these known cost increases~~mitigate the impact of anticipated tariffs. This inventory was consumed during the third quarter and ~~may need to increase prices again to offset the cost of any additional inflationary increases~~inventory levels are now at a seasonal

normal, although reflecting inflation. As a result, payments for inventory in the ~~coming quarters.~~third quarter were significantly less than a year ago.

~~Our financial results~~Operating cash flow for the ~~three and~~ nine months ended September 30, ~~2018 were also impacted by~~2019 of $75.1 million decreased $9.6 million compared with last year, primarily due to higher income tax payments in 2019.

With the ~~following factors:~~

~~Foreign currency translation impacted~~high operating cash flow in the quarter we repaid $174 million of our ~~net sales and operating income unfavorably for~~seasonal borrowings in the three months ended September 30, 2018, but it still has had a positive impact on a year-to-date basis. However, due to the recent strengthening of the U.S. dollar, we expect foreign currency translation to negatively impact our 2018 fourth quarter and full year financial results by $0.02 to $0.03 per share based on current spot rates.

~~The quarter and year-to-date average foreign exchange rates have moved as follows for our major currencies relative to the U.S. dollar:~~

2018 1^ST QTR Average Versus 2017 1^ST QTR Average

2018 2^ND QTR Average Versus 2017 2^ND QTR Average

2018 3^RDQTR Average Versus 2017 3^RD QTR Average
2018 YTD Average Versus 2017 YTD Average
Currency Increase/(Decline) Increase/(Decline) Increase/(Decline) Increase/(Decline)
Euro 15% 9% (1)% 7%
Australian dollar 4% 1% (7)% (1)%
Canadian dollar 5% 4% (4)% 2%
Brazilian real (3)% (11)% (20)% (11)%
British pound 12% 7% —% 6%
Mexican peso 8% (4)% (6)% (1)%
Japanese yen 5% 2% —% 2%

~~The nine months ended September 30, 2018 include the results of Esselte in all months, compared to only eight months included in the nine months ended September 30, 2017.~~

~~The three and nine months ended September 30, 2018 include the results of GOBA for three months.~~2019.

Consolidated Results of Operations for the Three Months Ended September 30, 2019 and September 30, 2018 ~~and~~ ~~September 30, 2017~~


	Three Months Ended September 30,						Amount of Change						Three Months Ended September 30,						Amount of Change
(in millions, except per share data)	2018			2017			$			%/pts			2019			2018			$			%/pts
Net sales	$	507.3		$	532.2		$	(24.9	)	(4.7	)%		$	505.7		$	507.3		$	(1.6	)	(0.3	)%
Cost of products sold	346.5			354.0			(7.5		)	(2.1	)%		349.8			346.5			3.3			1.0	%
Gross profit	160.8			178.2			(17.4		)	(9.8	)%		155.9			160.8			(4.9		)	(3.0	)%
Gross profit margin	31.7		%	33.5		%				(1.8)		pts	30.8		%	31.7		%				(0.9)		pts
Selling, general and administrative expenses	92.8			109.8			(17.0		)	(15.5	)%		96.4			92.8			3.6			3.9	%
Amortization of intangibles	9.4			9.4			—			-			8.6			9.4			(0.8		)	(8.5	)%
Restructuring charges	1.1			2.3			(1.2		)	(52.2	)%		2.1			1.1			1.0			90.9	%
Operating income	57.5			56.7			0.8			1.4	%		48.8			57.5			(8.7		)	(15.1	)%
Operating income margin	11.3		%	10.7		%				0.6		pts	9.6		%	11.3		%				(1.7)		pts
Interest expense	11.6			10.7			0.9			8.4	%		11.5			11.6			(0.1		)	(0.9	)%
Interest income	(1.1		)	(1.6		)	(0.5		)	(31.3	)%		(0.7		)	(1.1		)	(0.4		)	(36.4	)%
Non-operating pension income	(2.6		)	(2.0		)	0.6			30.0	%		(1.3		)	(2.6		)	(1.3		)	(50.0	)%
Other expense (income), net	0.6			(0.2		)	0.8			NM
Other (income) expense, net													(0.9		)	0.6			1.5			NM
Income tax expense	13.4			19.2			(5.8		)	(30.2	)%		12.2			13.4			(1.2		)	(9.0	)%
Effective tax rate	27.3		%	38.6		%				(11.3)		pts	30.3		%	27.3		%				3.0		pts
Net income	35.6			30.6			5.0			16.3	%		28.0			35.6			(7.6		)	(21.3	)%
Weighted average number of diluted shares outstanding:	105.9			110.3			(4.4		)	(4.0	)%		98.9			105.9			(7.0		)	(6.6	)%
Diluted income per share	$	0.34		$	0.28		$	0.06		21.4	%		$	0.28		$	0.34		$	(0.06	)	(17.6	)%

Net Sales

Net sales of $505.7 million decreased $1.6 million, or 0.3 percent, from $507.3 million ~~including $10.0 million attributable to the GOBA Acquisition, decreased $24.9~~last year. The decrease reflected negative foreign exchange of $9.7 million, or ~~4.7%,~~1.9 percent, partially offset by $5.7 million, or 1.1 percent, in net sales from ~~$532.2~~Foroni. Excluding net sales from Foroni and foreign exchange, comparable net sales increased $2.4 million, or 0.5 percent, as higher back-to-school sales in the ~~prior-year period. Foreign currency translation reduced net sales~~North America segment were partially offset by ~~$15.5 million, or 2.9%,~~declines in the ~~current-year period. Comparable net sales, excluding sales from GOBA~~EMEA and foreign currency translation, decreased 3.7%, primarily due to lower sales to wholesalers, and the earlier timing of back-to-school orders, which occurred in the second quarter of 2018 compared to the third quarter of 2017, as well as lower sales from reduced placements of certain calendar products.International segments.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in ~~the manufacturing,~~manufacturing; procurement and distribution ~~process,~~process; allocation of certain information technology costs supporting those ~~processes,~~processes; inbound and outbound ~~freight,~~freight; shipping and handling ~~costs,~~costs; purchasing costs associated with materials and packaging used in the production ~~processes,~~processes; and inventory valuation adjustments.

Cost of products sold ~~of $346.5~~was $349.8 million, ~~including $7.1 million attributable to GOBA, decreased $7.5~~up $3.3 million, or ~~2.1%,~~1.0 percent, from ~~$354.0 million in the prior-year period.~~$346.5 million. Foreign ~~currency translation~~exchange reduced cost of products sold ~~by $10.5~~$6.5 million, or ~~3.0%, in the current-year period. Underlying~~1.9 percent. Foroni added $4.2 million, or 1.2 percent. Excluding Foroni and foreign exchange, cost of products sold ~~excluding GOBA and foreign currency translation, increased due to product mix and~~rose primarily because of inflationary cost increases, ~~in input costs in North America, some of which was driven by new tariffs impacting the U.S, partially offset by lower comparable net sales.~~including tariffs.

Gross Profit

We believe that gross profit and gross profit margin provide enhanced shareholder understanding of our underlying operating profit drivers. Gross profit ofwas $155.9 million, down $4.9 million, or 3.0 percent, from $160.8 million ~~including $2.9 million attributable to GOBA, decreased $17.4~~last year. Foroni contributed $1.5 million, or ~~9.8%, from $178.2 million in the prior-year period. Foreign currency translation~~0.9 percent, while foreign exchange reduced gross profit ~~by $5.0~~$3.2 million, or ~~2.8%, in the current-year period. Underlying~~2.0 percent. Excluding Foroni and foreign exchange, gross profit ~~excluding GOBA~~ and ~~foreign currency translation,~~gross profit margin decreased primarily due to ~~lower net sales,~~ unfavorable product mix and ~~rising input costs, particularly in the North America segment, partially offset by~~lower cost ~~savings.~~absorption as we reduced inventory.

~~Likewise, gross~~Gross profit as a percent of net sales decreased to ~~31.7%~~30.8 percent from ~~33.5%.~~31.7 percent for the reasons noted above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, and information technology).

SG&A of $96.4 million increased $3.6 million, or 3.9 percent, from $92.8 ~~million, including~~million. Foroni added $1.2 million, ~~attributable to GOBA, decreased $17.0~~or 1.3 percent. Foreign exchange reduced SG&A $1.7 million, or ~~15.5%, from $109.8 million in the~~1.8 percent. The prior-year ~~period. The current-year~~ period ~~includes~~included $0.9 million of integration costs primarily related to Esselte. The current-year period included $1.4 million of transaction and integration costs primarily related to the ~~Esselte~~Foroni Acquisition. Excluding Foroni, transaction and ~~GOBA acquisitions. The prior-year period included $5.0 million of~~ integration costs, and ~~transaction costs related to both the Esselte and Pelikan Artline acquisitions. Foreign currency translation reduced~~foreign exchange, SG&A ~~by $2.5 million, or 2.3%, in the current-year period. Underlying SG&A, excluding integration and transaction costs, foreign currency translation and GOBA, decreased~~increased primarily due to ~~a $9.9 million reduction in~~higher management incentive compensation ~~expenses resulting from the release of accruals based on our lower performance expectations for 2018, and synergy savings.~~

expenses. SG&A as a percentage of net sales ~~decreased~~increased to ~~18.3%~~19.1 percent from ~~20.6% in the prior-year period, primarily due to lower management incentive compensation expenses, synergy savings, and lower integration and transaction costs.~~18.3 percent.

~~Restructuring Charges~~

Restructuring charges of $1.1 million decreased $1.2 million, or 52.2%, from $2.3 million in the prior-year period. The current-year period charges primarily related to Esselte integration activities. The charges in the prior-year period primarily related to both Esselte and Pelikan Artline integration activities.

Operating Income

Operating income ofwas $48.8 million, down $8.7 million, or 15.1 percent, from $57.5 million ~~including $1.5 million attributable to GOBA, increased $0.8 million, or 1.4%, from $56.7 million in the prior-year period.~~last year. Foreign ~~currency translation~~exchange reduced operating income ~~by $2.3~~$1.1 million, or ~~4.1% in the current-year period. Underlying~~1.9 percent. Foroni contributed $0.2 million, or 0.3 percent. Excluding Foroni, transaction and integration costs, restructuring charges, and foreign exchange, operating income ~~excluding GOBA, restructuring charges, integration and transaction costs and foreign currency translation,~~ decreased due to lower gross profit and ~~margin, substantially offset by a $10.5 million reduction in management incentive compensation~~higher SG&A expenses.

Interest Expense, Non-Operating Pension Income and Other (Income) Expense, ~~(Income),~~ Net

Interest expense of $11.5 million decreased $0.1 million, or 0.9 percent, from $11.6 million ~~increased $0.9 million, or 8.4%, from $10.7 million in the prior-year period. The increase~~last year. Higher average debt outstanding and higher interest rates on our variable rate debt was ~~primarily due to higher forward points~~offset by lower hedging cost on ~~hedged~~our intercompany loans.

Non-operating pension income of $1.3 million decreased $1.3 million, or 50.0 percent, from $2.6 million last year. The decrease was due to lower expected rates of return on plan assets in our foreign plans.

Other (income) expense, ~~(income),~~ net was anincome of $0.9 million compared to expense of $0.6 million ~~compared to income of $0.2 million~~ in the ~~prior-year period.~~same period last year. The increase in ~~expense~~income was due to a gain from the release of reserves no longer required for certain operating taxes related to a pre-acquisition period for GOBA and lower foreign exchange losses ~~in the current-year period.~~this year.

Income ~~Taxes~~Tax Expense

~~For the current-year period,~~Income tax expense was $12.2 million on income before taxes of $40.2 million, or an effective tax rate of 30.3 percent. Last year income tax expense was $13.4 million on income before taxes of $49.0 million, or an effective tax rate of ~~27.3%.~~27.3 percent. The ~~lower~~higher effective tax rate ~~in the current-year period~~this year was primarily due to the positive impacts attributable to the Tax Cuts and Jobs Act ("U.S. Tax Act"). For the prior-year period, income tax expense was $19.2 million on income before taxes of $49.8 million, or an effective tax rate of 38.6%. The high effective tax rate in the prior-year period was primarily due to $1.1$1.6 million in ~~non-deductible expenses~~Brazilian income taxes accrued on a contingent gain related to the ~~acquisitions.~~Brazil Tax Credits.

See "Note 18. Commitments and Contingencies - Brazil Tax Credits" to the condensed consolidated financial statements contained in Item 1. of this report for additional details on the Brazil Tax Credits.

Net Income/Diluted Income per Share

Net income ofwas $28.0 million, down $7.6 million, or 21.3 percent, from $35.6 million ~~increased $5.0~~last year. Foreign exchange reduced net income $0.7 million, or ~~16.3%, from $30.6 million, in the prior-year period.~~2.0 percent. Diluted income per share ofwas $0.28 compared with $0.34 ~~increased $0.06, or 21.4% from $0.28 per diluted share in the prior-year period. Foreign currency translation reduced~~last year. Excluding Foroni, transaction and integration costs, restructuring charges, and foreign exchange, net income ~~by $2.0 million, or 6.5% in the current-year period. Underlying net income, excluding foreign currency translation, increased primarily~~decreased due to lower gross profit and higher SG&A expenses. Diluted income ~~taxes.~~

per share benefited from fewer outstanding shares.

Segment Net Sales and Operating Income for the Three Months Ended September 30, ~~2018~~2019 and September 30, ~~2017~~2018


	Three Months Ended September 30, 2018									Amount of Change Compared to the Three Months Ended September 30, 2017															Three Months Ended September 30, 2019											Amount of Change Compared to the Three Months Ended September 30, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income (A)				Segment Operating Income			Margin Points		Net Sales				Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income (A)				Segment Operating Income			Margin Points

(in millions)						$							%			$				%												$				%		$				%
ACCO Brands North America	$	263.4				$			33.7			12.8	%		$	(26.9	)		(9.3)%		$	(15.9	)		(32.1	)%		(430			)	$			272.4			$	33.7			12.4	%		$	9.0			3.4%		$	—		—	%	(40	)
ACCO Brands EMEA	143.1				14.6						10.2	%		2.8				2.0%		6.8				87.2	%		460		133.1				13.8				10.4	%		(10.0		)		(7.0)%		(0.8		)		(5.5	)%		20
ACCO Brands International	100.8		16.1				16.0	%		(0.8		)		(0.8)%		4.9				43.8	%		500		100.2				10.8				10.8	%		(0.6		)		(0.6)%		(5.3		)		(32.9	)%		(520	)
Total	$	507.3	$	64.4						$	(24.9	)				$	(4.2	)							$	505.7			$	58.3						$	(1.6	)				$	(6.1	)

	Three Months Ended September 30, 2017																								Three Months Ended September 30, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin																		Net Sales				Segment Operating Income (A)				Segment Operating Income Margin

(in millions)
ACCO Brands North America	$	290.3			$	49.6					17.1	%																			$	263.4					$	33.7			12.8	%
ACCO Brands EMEA	140.3				7.8						5.6	%																			143.1						14.6				10.2	%
ACCO Brands International	101.6		11.2				11.0	%																		100.8					16.1				16.0	%
Total	$	532.2	$	68.6																						$	507.3				$	64.4

(A) Segment operating income excludes corporate costs. See "Part I, Item 1.Note ~~16.~~17. Information on Business Segments," for a reconciliation of total "Segment operating income" to "Income before income tax."

ACCO Brands North America

~~ACCO Brands North America net~~Net sales ofwere $272.4 million, up $9.0 million, or 3.4 percent, from $263.4 million ~~decreased $26.9 million, or 9.3%, from $290.3 million in the prior-year period. Foreign currency translation~~last year. Unfavorable foreign exchange reduced net sales ~~by $1.4~~$0.2 million, or ~~0.5% in the current-year period. Comparable net sales, excluding~~0.1 percent. Excluding foreign currency translation, decreased 8.8% primarily due to lower sales to U.S. wholesalers, the earlier timing of back-to-school orders compared to 2017, and lower sales from reduced placements of certain calendar products.

ACCO Brands North America operating income of $33.7 million decreased $15.9 million, or 32.1%, from $49.6 million in the prior-year period. Operating income as a percent of net sales decreased to 12.8%, compared to 17.1% in the prior-year period.

The decrease in operating income was primarily due to lower net sales and lower gross profit and margin. The lower gross profit and margin resulted from unfavorable product mix and rising input costs. In the U.S. we saw increases in our purchase costs for paper, wire, steel and aluminum, some of which were driven by new tariffs, and increases in fuel costs and transport rates. The decline in gross profit and margin was partially offset by lower SG&A expenses primarily from a reduction in management incentive compensation expenses resulting from the release of accruals based on our lower performance expectations for 2018.

We currently expect the adverse impact of tariffs on our U.S. financial results to become more significant going forward, increasing in the fourth quarter of 2018 and further increasing in the first half of 2019 as additional tariffs take effect. We also expect the uncertainty and disruption within the commercial channels (including wholesalers, independent dealers and office superstores) to continue for some time and until the situation stabilizes, resulting in lower sales to these channels and accompanying profit erosion.

~~ACCO Brands EMEA~~

ACCO Brands EMEA net sales of $143.1 million increased $2.8 million, or 2.0%, from $140.3 million in the prior-year period. Foreign currency translation reduced net sales by $3.8 million, or 2.7% in the current-year period. Comparable net sales, excluding foreign currency translation, increased 4.7% due to increased volume resulting from expanding distribution of legacy ACCO Brands' products to the acquired Esselte customer base, as well as strong growth in shredders and computer products.

~~ACCO Brands EMEA operating income of $14.6 million increased $6.8 million, or 87.2%, from $7.8 million in the prior-year period. Operating income as a percent of~~exchange, comparable net sales increased to 10.2% from 5.6% in the prior-year period. Foreign currency translation reduced operating income by $0.4 million in the current-year period. Underlying operating income, excluding foreign currency translation, increased3.5 percent, largely due to ~~higher gross profit and margin, synergy savings, increased~~strong back-to-school sales. Net sales ~~and $1.1 million in lower restructuring charges and integration costs. The higher gross profit margin was driven by favorable product mix and synergy savings.~~

~~ACCO Brands International~~

~~ACCO Brands International net sales of $100.8 million,~~benefited from price increases, including $10.0 million attributable to GOBA, decreased $0.8 million, or 0.8%, from $101.6 million in the prior-year period. Foreign currency translation reduced net sales by $10.3 million, or 10.1% in the current-year period. Comparable net sales, excluding GOBA and foreign currency translation, decreased 0.5%. Declines in Australia, primarily due to lower sales from reduced placements of private label commodity products, were only partially offset by growth in Brazil and Asia.

ACCO Brands International operating income of $16.1 million, including $1.5 million attributable to GOBA, increased $4.9 million, or 43.8%, from $11.2 million in the prior-year period. Operating income as a percent of net sales increased to 16.0% from 11.0% in the prior-year period. Foreign currency translation reduced operating income by $1.8 million in the current-year period. Underlying operating income, excluding GOBA and foreign currency translation, increased due to productivity improvements and costs savings, $1.5 million of lower restructuring charges and integration costs in the current-year period, and lower bad debt expenses, whichon back-to-school items that were partially offset by lower volume.

Operating income was $33.7 million, flat with last year. Operating income margin decreased to 12.4 percent from 12.8 percent. The margin decrease was a result of an unfavorable product mix, lower cost absorption from reducing inventory, higher management incentive compensation expenses and higher restructuring charges.

Tariffs on finished goods we import from China increased in May 2019. This negatively impacted our cost of products sold in the third quarter of 2019. We raised prices in August to offset the impact of these increased tariffs. Additional tariffs became effective in September 2019, which will negatively impact our cost of products sold during the fourth quarter and beyond. An additional tariff rate increase is currently expected to take effect in December 2019. We intend to continue to increase our sales prices to recover any increased costs from tariffs, which may result in a decrease in sales volume. In such circumstances, the impact of increased tariffs on cash flow and cost of products sold is likely to occur before we see the benefit of our price increases because of our contractual obligations to provide our customers with advance notice of price increases.

ACCO Brands EMEA

Net sales were $133.1 million, down $10.0 million, or 7.0 percent, from $143.1 million last year. The decrease was primarily due to foreign exchange, which reduced net sales $6.7 million, or 4.7 percent. Excluding foreign exchange, comparable net sales decreased 2.3 percent, primarily due to reduced demand from customers in a slowing economic environment.

Operating income was $13.8 million, down $0.8 million, or 5.5 percent, from $14.6 million last year, but operating income margin increased slightly to 10.4 percent from 10.2 percent. Foreign exchange reduced operating income $0.7 million, or 4.8 percent. The current-year period included only $0.1 million of restructuring charges, while the same period last year included $2.2 million of restructuring charges and integration costs primarily related to Esselte. Excluding foreign exchange, restructuring charges and integration costs, operating income decreased as lower comparable net sales and higher input costs were only partially offset by lower management incentive compensation expenses.

ACCO Brands International

Net sales were $100.2 million, down $0.6 million, or 0.6 percent, from $100.8 million last year. Foroni contributed net sales of $5.7 million, or 5.7 percent. Unfavorable foreign exchange reduced net sales $2.8 million, or 2.8 percent. Excluding Foroni and foreign exchange, comparable net sales decreased 3.5 percent. The decline was mainly due to lost placements in Australia and lower back-to-school sales in Mexico, and lower sales in Asia as a result of exiting our commodity filing business, partially offset by growth in Brazil.

Operating income was $10.8 million, down $5.3 million, or 32.9 percent, from $16.1 million last year. Operating income included $0.2 million from Foroni. Foreign exchange reduced operating income $0.4 million, or 2.5 percent. Operating margin decreased to 10.8 percent from 16.0 percent. Excluding Foroni and foreign exchange, operating income decreased primarily due to lower gross profit margin driven by inflationary cost increases and expenses related to our commodity filing business exit in Asia.

Consolidated Results of Operations for the Nine Months Ended September 30, 2019 and September 30, 2018 ~~and~~ ~~September 30, 2017~~


	Nine Months Ended September 30,						Amount of Change						Nine Months Ended September 30,						Amount of Change
(in millions, except per share data)	2018			2017			$			%/pts			2019			2018			$			%/pts
Net sales	$	1,411.9		$	1,382.0		$	29.9		2.2	%		$	1,418.3		$	1,411.9		$	6.4		0.5	%
Cost of products sold	961.2			924.1			37.1			4.0	%		970.8			961.2			9.6			1.0	%
Gross profit	450.7			457.9			(7.2		)	(1.6	)%		447.5			450.7			(3.2		)	(0.7	)%
Gross profit margin	31.9		%	33.1		%				(1.2)		pts	31.6		%	31.9		%				(0.3)		pts
Selling, general and administrative expenses	294.6			308.2			(13.6		)	(4.4	)%		287.8			294.6			(6.8		)	(2.3	)%
Amortization of intangibles	27.2			26.4			0.8			3.0	%		26.8			27.2			(0.4		)	(1.5	)%
Restructuring charges	7.9			16.1			(8.2		)	(50.9	)%		4.8			7.9			(3.1		)	(39.2	)%
Operating income	121.0			107.2			13.8			12.9	%		128.1			121.0			7.1			5.9	%
Operating income margin	8.6		%	7.8		%				0.8		pts	9.0		%	8.6		%				0.4		pts
Interest expense	30.9			31.3			(0.4		)	(1.3	)%		33.6			30.9			2.7			8.7	%
Interest income	(3.5		)	(4.9		)	(1.4		)	(28.6	)%		(2.9		)	(3.5		)	(0.6		)	(17.1	)%
Non-operating pension income	(7.1		)	(6.2		)	0.9			14.5	%		(4.1		)	(7.1		)	(3.0		)	(42.3	)%
Other expense (income), net	1.6			(1.0		)	2.6			NM
Other expense, net													0.1			1.6			(1.5		)	(93.8	)%
Income tax expense	27.4			30.3			(2.9		)	(9.6	)%		38.1			27.4			10.7			39.1	%
Effective tax rate	27.6		%	34.4		%				(6.8)		pts	37.6		%	27.6		%				10.0		pts
Net income	71.7			57.7			14.0			24.3	%		63.3			71.7			(8.4		)	(11.7	)%
Weighted average number of diluted shares outstanding:	107.9			111.5			(3.6		)	(3.2	)%		101.9			107.9			(6.0		)	(5.6	)%
Diluted income per share	$	0.66		$	0.52		$	0.14		26.9	%		$	0.62		$	0.66		$	(0.04	)	(6.1	)%

Net Sales

Net sales ofwere $1,418.3 million, up $6.4 million, or 0.5 percent, from $1,411.9 million ~~including $44.2~~last year. Unfavorable foreign exchange reduced net sales $45.4 million, or 3.2 percent. Net sales benefited from the ~~addition~~additional six months for GOBA and two months for Foroni that contributed $23.7 million and $5.7 million, respectively, or a total of ~~Esselte for the month of January~~2.1 percent. Excluding foreign exchange and ~~$10.0 million attributable to GOBA, increased $29.9 million, or 2.2%, from $1,382.0 million in the prior-year period. Foreign currency translation increased~~ net ~~sales by $9.6 million, or 0.7%, in the current-year period. Comparable net sales, excluding the one month of sales from Esselte,~~ sales from GOBA and ~~foreign currency translation, decreased 2.4% driven by declines~~Foroni, comparable net sales increased $22.4 million, or 1.6 percent, as growth in the North America ~~and~~segment was partially offset by declines, primarily in the International ~~segments.~~segment.

Cost of Products Sold

Cost of products sold ofwas $970.8 million, up $9.6 million, or 1.0 percent, from $961.2 million ~~including $7.1 million attributable to~~last year. GOBA ~~increased $37.1~~and Foroni added $19.8 million, or ~~4.0%, from $924.1 million in the prior-year period.~~2.1 percent. Foreign ~~currency translation increased~~exchange reduced cost of products sold ~~by $5.6~~$30.9 million, or ~~0.6%, in the current-year period. Underlying~~3.2 percent. Excluding GOBA, Foroni, and foreign exchange, cost of products sold ~~excluding GOBA and foreign currency translation,~~ increased due to ~~the inclusion of the results of Esselte for the month of January, product mix~~cost increases, primarily in North America from inflationary cost increases and ~~inflationary increases in input costs, some of which were driven by new~~ tariffs, ~~in the U.S,~~ partially offset by ~~lower comparable net sales.~~productivity and cost savings.

Gross Profit

Gross profit ofwas $447.5 million, down $3.2 million, or 0.7 percent, from $450.7 million ~~including $2.9 million attributable to~~last year. GOBA ~~decreased $7.2~~and Foroni contributed $9.6 million, or ~~1.6%, from $457.9 million in the prior-year period.~~2.1 percent. Foreign ~~currency translation increased~~exchange reduced gross profit ~~by $4.0~~$14.5 million, or ~~0.9%,~~3.2 percent, in ~~the current-year period. Underlying~~2019. Excluding GOBA, Foroni, and foreign exchange, gross profit ~~excluding GOBA and foreign currency translation, decreased~~increased, primarily ~~due to unfavorable product mix~~from higher net sales in the North America ~~and International segments and rising input costs in North America, partially offset by cost savings.~~segment.

~~Likewise, gross~~Gross profit as a percent of net sales decreased to ~~31.9%~~31.6 percent from ~~33.1%.~~31.9 percent. Excluding the acquisitions and foreign exchange, gross profit margin declined in both the EMEA and International segments.

Selling, General and Administrative Expenses

SG&A ofwas $287.8 million, down $6.8 million, or 2.3 percent, from $294.6 million ~~including $1.2 million attributable to~~last year. GOBA ~~decreased $13.6~~and Foroni contributed $4.5 million, or ~~4.4%, from $308.2 million in the prior-year period.~~1.5 percent. Foreign ~~currency translation increased~~exchange reduced SG&A ~~by $3.1~~$9.1 million, or ~~1.0%, in the current-year period.~~3.1 percent. The ~~current-year period~~current year includes ~~$4.4~~$1.9 million of ~~integration costs primarily related to the Esselte Acquisition~~transaction and ~~transaction~~integration costs related to the Foroni, Cumberland asset and GOBA ~~Acquisition.~~acquisitions. The prior-year period included ~~$13.1~~$4.4 million in integration ~~and transaction~~ costs related primarily to ~~the Esselte and Pelikan Artline acquisitions. Underlying SG&A, excluding~~Esselte. Excluding GOBA, Foroni, transaction and integration costs, and foreign currency translation, decreased due to cost and synergy savings and a $13.4 million reduction in management incentive compensation expenses resulting from the release of accruals based on our lower performance expectations for 2018, partially offset by the inclusion of the results of Esselte for the month of January.exchange, SG&A was flat.

SG&A as a percentage of net sales decreased to ~~20.9%~~20.3 percent from ~~22.3% in the prior-year period,~~20.9 percent last year, primarily due to ~~cost and synergy savings, lower management incentive compensation expenses and lower integration and transaction costs incurred in the current-year period.~~higher net sales.

Restructuring Charges

Restructuring charges ofwere $4.8 million, down $3.1 million from $7.9 million ~~decreased $8.2 million, or 50.9%, from $16.1 million~~last year. The current-year charges related to severance costs associated with cost reduction initiatives in the ~~prior-year period.~~operating structure of our North America and International segments. The ~~current-year period~~prior-year charges primarily related to ~~additional~~Esselte integration activities, and changes in the operating structure of the North America ~~segment and the continued integration of Esselte within the EMEA~~ segment. ~~The prior-year period charges of $16.1 million primarily related to Esselte and Pelikan Artline integration activities.~~

Operating Income

Operating income ofwas $128.1 million, up $7.1 million, or 5.9 percent, from $121.0 million ~~including $1.5 million attributable to~~last year. GOBA ~~was up $13.8~~and Foroni contributed $4.2 million, or ~~12.9%, from $107.2 million in the prior-year period.~~3.5 percent. Foreign ~~currency translation~~exchange reduced operating income ~~by $0.1~~$4.1 million, or ~~0.1%, in the current-year period. Underlying operating income, excluding~~3.4 percent. Excluding GOBA and Foroni, restructuring charges, transaction and integration costs, and foreign ~~currency translation, decreased~~exchange, operating income increased primarily due to ~~lower gross profit~~higher net sales in North America and ~~margin from product mix, primarily~~productivity and cost savings, which more than offset net sales declines in the ~~North America~~International segment, ~~substantially offset by $14.2~~as well as unfavorable product mix.

Interest Expense and Non-Operating Pension Income

Interest expense was $33.6 million, ~~reduction in management incentive compensation expenses resulting~~up $2.7 million, or 8.7 percent, from ~~the release of accruals based~~$30.9 million last year. The increase was primarily due to higher average debt outstanding and higher interest rates on our variable rate debt.

Non-operating pension income was $4.1 million, down $3.0 million, or 42.3 percent, from $7.1 million in 2018. The decrease was due to lower ~~performance expectations~~expected rates of return on plan assets in our foreign plans.

Income Tax Expense

Income tax expense was $38.1 million on income before taxes of $101.4 million, or an effective tax rate of 37.6 percent. The high effective tax rate was due to recording additional reserves for ~~2018.~~

~~Other Expense (Income)~~uncertain tax positions related to the Brazil Tax Assessments ($5.6 million), ~~Net~~

~~Other expense (income), net expense~~the recording of deferred state taxes on unremitted non-U.S. earnings ($0.8 million) and the recording of reserves related to various tax contingencies, and additional taxes of $1.6 million ~~was up $2.6 million from~~in Brazilian income ~~of $1.0 million in the prior-year period. The prior-year period included~~taxes accrued on a ~~$2.3 million foreign currency~~contingent gain related to the ~~settlement~~Brazil Tax Credits.

The increase of ~~certain long-term intercompany transactions and a $0.3~~$5.6 million ~~write-off of debt issuance and other costs associated with~~in the ~~Company's refinancing~~reserve related to uncertain tax positions in connection with the ~~Esselte Acquisition~~Brazil Tax Assessments was recorded in the first quarter of ~~2017. The remaining~~2019, although the increase should have been recorded in ~~expense was due~~2018 when we decided to ~~foreign exchange losses in~~appeal an administrative decision to the ~~current-year period.~~judicial level.

~~Income Taxes~~

For the ~~current-year period,~~prior year, income tax expense was $27.4 million on income before taxes of $99.1 million, or an effective tax rate of ~~27.6%.~~27.6 percent. The ~~lower~~low effective tax rate ~~in the current-year period~~ was primarily due to a $5.6 million benefit resulting from the partial release of the reserve for the ~~Brazilian~~Brazil Tax ~~Assessment~~Assessments due to the expiration of the statute of limitations for the 2011 tax year and the positive impacts attributable to the U.S. Tax Act. This was partially offset by the revaluation of the deferred tax assets and liabilities resulting from the decrease in the Swedish corporate tax rate. year.

See "Note 11. Income Taxes ~~-Income~~- Brazil Tax ~~Assessment - Tilibra"~~Assessments" to the condensed consolidated financial statements contained in Item 1. of this report for additional details on the ~~Brazilian~~Brazil Tax ~~Assessment. For~~Assessments. See "Note 18. Commitments and Contingencies - Brazil Tax Credits" to the ~~prior-year period, income tax expense was $30.3 million~~condensed consolidated financial statements contained in Item 1. of this report for additional details on ~~income before taxes of $88.0 million, or an effective tax rate of 34.4%. The prior-year period included $5.5 million tax benefit from stock-based compensation.~~the Brazil Tax Credits.

Net Income/Diluted Income per Share

Net income ofwas $63.3 million down $8.4 million, or 11.7 percent, from $71.7 million ~~increased $14.0~~last year. Foreign exchange reduced net income $2.0 million, or ~~24.3%, from $57.7 million in the prior-year period.~~2.8 percent. Diluted income per share was $0.62, compared with $0.66 ~~up $0.14, or 26.9% from $0.52 per diluted share in the prior-year period. The increase in~~last year. Excluding GOBA, Foroni, restructuring charges, transaction and integration costs, and foreign exchange, net income ~~was~~decreased primarily ~~driven by lower management incentive compensation expenses~~due to higher income tax and ~~restructuring charges,~~interest expense, partially offset by ~~lower gross profit and margin.~~higher operating income. Diluted income per share benefited from fewer outstanding shares.

Segment Net Sales and Operating Income for the Nine Months Ended September 30, ~~2018~~2019 and September 30, ~~2017~~2018


	Nine Months Ended September 30, 2018									Amount of Change Compared to the Nine Months Ended September 30, 2017															Nine Months Ended September 30, 2019											Amount of Change Compared to the Nine Months Ended September 30, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income (A)				Segment Operating Income			Margin Points		Net Sales				Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income (A)				Segment Operating Income		Margin Points

(in millions)						$							%			$				%												$				%		$				%
ACCO Brands North America	$	711.8				$			88.1			12.4	%		$	(34.0	)		(4.6)%		$	(19.0	)		(17.7	)%		(200			)	$			740.7			$	101.1			13.6	%		$	28.9		4.1%		$	13.0		14.8	%	120
ACCO Brands EMEA	438.1				37.1						8.5	%		72.8				19.9%		26.3				243.5	%		550		407.9				37.1				9.1	%		(30.2		)		(6.9)%		—			—	%		60
ACCO Brands International	262.0		25.2				9.6	%		(8.9		)		(3.3)%		(0.1		)		(0.4	)%		30		269.7				20.5				7.6	%		7.7				2.9%		(4.7		)		(18.7	)%	(200	)
Total	$	1,411.9	$	150.4						$	29.9					$	7.2								$	1,418.3			$	158.7						$	6.4					$	8.3

	Nine Months Ended September 30, 2017																								Nine Months Ended September 30, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin																		Net Sales				Segment Operating Income (A)				Segment Operating Income Margin

(in millions)
ACCO Brands North America	$	745.8			$	107.1					14.4	%																			$	711.8					$	88.1			12.4	%
ACCO Brands EMEA	365.3				10.8						3.0	%																			438.1						37.1				8.5	%
ACCO Brands International	270.9		25.3				9.3	%																		262.0					25.2				9.6	%
Total	$	1,382.0	$	143.2																						$	1,411.9				$	150.4

(A) Segment operating income excludes corporate costs. See "Part I, Item 1. Note ~~16.~~17. Information on Business Segments," for a reconciliation of total "Segment operating income" to "Income before income tax."

ACCO Brands North America

~~ACCO Brands North America~~Net sales were $740.7 million, up $28.9 million, or 4.1 percent, from $711.8 million last year. Unfavorable foreign exchange reduced net sales ~~of $711.8 million, including $0.9 million from the addition of Esselte for the month of January, decreased $34.0~~$2.5 million, or ~~4.6%, from $745.8 million in the prior-year period. Foreign currency translation increased~~0.4 percent. Excluding foreign exchange, comparable net sales ~~by $0.8 million, or 0.1%, in the current-year period. Comparable net sales, excluding Esselte and foreign currency translation, decreased 4.8% primarily~~increased 4.5 percent, largely due to ~~lower sales to U.S. wholesalers, which~~a strong back-to-school season, benefit from price increases, including on back-to-school items that were ~~down by approximately one-third and lower sales from reduced placements of certain calendar products.~~

ACCO Brands North America operating income of $88.1 million decreased $19.0 million, or 17.7%, from $107.1 million in the prior-year period, and operating income margin decreased to 12.4% from 14.4%. Operating income decreased due to lower sales and lower gross profit and margin driven by unfavorable product mix and rising input costs. This was partially offset by ~~lower SG&A expenses primarily~~volume declines, including lost placements.

Operating income was $101.1 million, up $13.0 million, or 14.8 percent, from ~~lower management incentive compensation expenses~~$88.1 million last year. Operating income margin increased to 13.6 percent from 12.4 percent. Operating income and margin increased because of higher net sales, and productivity and cost savings.

ACCO Brands EMEA

~~ACCO Brands EMEA~~Net sales were $407.9 million, down $30.2 million, or 6.9 percent, from $438.1 million last year due to foreign exchange, which reduced net sales ~~of $438.1 million, including $42.7 million from the addition of Esselte for the month of January, increased $72.8~~$29.1 million, or ~~19.9%, from $365.3 million in the prior-year period. Foreign currency translation increased~~6.6 percent. Excluding foreign exchange, comparable net sales ~~by $18.2~~decreased 0.3 percent.

Operating income was $37.1 million, even with last year. Foreign exchange reduced operating income $2.8 million, or 5.0%, in the current-year period. Comparable net sales, excluding Esselte and foreign currency translation, increased 3.2% due to increased volume resulting from expanding distribution of legacy ACCO Brands' products to the acquired Esselte customer base, as well as strong growth in shredders and computer products.

~~ACCO Brands EMEA operating income of $37.1 million increased $26.3 million, or 244%, from $10.8 million in the prior-year period, and operating~~7.5 percent. Operating income margin increased to ~~8.5%~~9.1 percent from ~~3.0%. Foreign currency translation increased~~8.5 percent. Excluding foreign exchange, operating income ~~by $1.3 million, or 12%, in the current-year period. Underlying operating income, excluding foreign currency translation,~~ increased primarily due to ~~the inclusion of the results of Esselte for the month of January, $6.3~~$7.0 million in lower restructuring charges and integration costs, ~~higher gross profit~~ and ~~margin~~savings from ~~both favorable mix and synergy savings.~~those prior year actions, partially offset by lower net sales.

ACCO Brands International

~~ACCO Brands International~~Net sales were $269.7 million, up $7.7 million, or 2.9 percent, from $262.0 million last year. The GOBA and Foroni acquisitions contributed net sales of ~~$262.0~~$23.7 million ~~including $10.0~~and $5.7 million, ~~attributable to GOBA and $0.6 million from the addition~~respectively, or a total of ~~Esselte for the month of January, decreased $8.9 million, or 3.3%, from $270.9 million in the prior-year period. Foreign currency translation~~11.2 percent. Unfavorable foreign exchange reduced net sales ~~by $9.4~~$13.8 million, or ~~3.5%, in the current-year period. Comparable~~5.3 percent. Excluding GOBA, Foroni and foreign exchange, comparable net sales ~~excluding GOBA, Esselte and foreign currency translation,~~ decreased ~~3.7%. The~~3.0 percent primarily due to lower demand, including lost placements in Australia. In our other territories, comparable net sales ~~decline~~grew in Brazil, were flat in Mexico, and declined in Asia as we exited our commodity filing business.

Operating income was ~~primarily driven by customer inventory reductions in Australia and Mexico, as well as lower sales~~$20.5 million, down $4.7 million, or 18.7 percent, from ~~reduced placements of private label commodity products in Australia. These declines were only partially offset by growth in Brazil.~~

~~ACCO Brands International operating income of~~ $25.2 million ~~including $1.5 million attributable to~~last year. GOBA ~~increased $0.1~~and Foroni contributed $4.2 million, or ~~0.4%, from $25.3 million in the prior-year period and operating income margin increased to 9.6% from 9.3%.~~16.7 percent. Foreign ~~currency translation~~exchange reduced operating income ~~by $1.4~~$1.0 million, or ~~5.5%, in the current-year period. Underlying~~4.0 percent. Operating income margin decreased to 7.6 percent from 9.6 percent. Excluding GOBA, Foroni and foreign exchange, operating income ~~excluding GOBA and foreign currency translation,~~ decreased primarily due to lower comparable net sales, and lower gross ~~profit. These factors were partially offset~~profit margin driven by ~~$5.0 million in lower~~unfavorable product mix and foreign-exchange-related-inflation. In addition, the segment was impacted by higher restructuring charges, ~~and integration costs, and cost savings. In addition, a benefit~~as well as expenses associated with our commodity filing business exit in ~~the prior-year period of $0.9 million from the recovery of an indirect tax in Brazil did not repeat.~~Asia.

SUPPLEMENTAL NON-GAAP FINANCIAL MEASURE

To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with the non-GAAP financial ~~measure "Comparable Net Sales Change.~~measurement entitled "comparable net sales."

We provide the comparable net sales ~~change in order~~measurement to facilitate comparisons of our historical sales results as well as to highlight the underlying sales trends in our business. We use ~~this non-GAAP financial measure~~comparable net sales in the internal evaluation and management of our business. We believe this measure provides management and investors with a more complete understanding of our underlying sales results and trends, and enhances the overall understanding of our past sales performance and our ~~future~~ prospects.

We calculate comparable net sales by excluding the effect of acquisitions and by translating the current-period foreign operation net sales at prior-year currency rates.

The following tables ~~provides~~provide a reconciliation of GAAP net sales change as reported to non-GAAP comparable net sales change:


						Amount of Change - Three Months Ended September 30, 2019 compared to the Three Months Ended September 30, 2018
						$ Change - Net Sales
							Non-GAAP
						GAAP				Comparable
						Net Sales		Currency		Net Sales
(in millions)						Change		Translation	Acquisition	Change
ACCO Brands North America						$9.0		$(0.2)	$—	$9.2
ACCO Brands EMEA						(10.0)		(6.7)	—	(3.3)
ACCO Brands International						(0.6)		(2.8)	5.7	(3.5)
Total						$(1.6)		$(9.7)	$5.7	$2.4
	Amount of Change - Three Months Ended September 30, 2018 compared to the Three Months Ended September 30, 2017
	$ Change - Net Sales					% Change - Net Sales
		Non-GAAP					Non-GAAP
	GAAP				Comparable	GAAP				Comparable
	Net Sales		Currency		Net Sales	Net Sales		Currency		Net Sales
	Change		Translation	Acquisition	Change	Change		Translation	Acquisition	Change
ACCO Brands North America	$(26.9)		$(1.4)	$—	$(25.5)	3.4%		(0.1)%	—%	3.5%
ACCO Brands EMEA	2.8		(3.8)	—	6.6	(7.0)%		(4.7)%	—%	(2.3)%
ACCO Brands International	(0.8)		(10.3)	10.0	(0.5)	(0.6)%		(2.8)%	5.7%	(3.5)%
Total	$(24.9)		$(15.5)	$10.0	$(19.4)	(0.3)%		(1.9)%	1.1%	0.5%

	% Change - Net Sales					Amount of Change - Nine Months Ended September 30, 2019 compared to the Nine Months Ended September 30, 2018
		Non-GAAP				$ Change - Net Sales
	GAAP				Comparable		Non-GAAP
	Net Sales		Currency		Net Sales	GAAP				Comparable
	Change		Translation	Acquisition	Change	Net Sales		Currency		Net Sales
(in millions)						Change		Translation	Acquisition	Change
ACCO Brands North America	(9.3)%		(0.5)%	—%	(8.8)%	$28.9		$(2.5)	$—	$31.4
ACCO Brands EMEA	2.0%		(2.7)%	—%	4.7%	(30.2)		(29.1)	—	(1.1)
ACCO Brands International	(0.8)%		(10.1)%	9.8%	(0.5)%	7.7		(13.8)	29.4	(7.9)
Total	(4.7)%		(2.9)%	1.9%	(3.7)%	$6.4		$(45.4)	$29.4	$22.4

						% Change - Net Sales
							Non-GAAP
						GAAP				Comparable
						Net Sales		Currency		Net Sales
						Change		Translation	Acquisition	Change
ACCO Brands North America						4.1%		(0.4)%	—%	4.5%
ACCO Brands EMEA						(6.9)%		(6.6)%	—%	(0.3)%
ACCO Brands International						2.9%		(5.3)%	11.2%	(3.0)%
Total						0.5%		(3.2)%	2.1%	1.6%

Amount of Change - Nine Months Ended September 30, 2018 compared to the Nine Months Ended September 30, 2017
$ Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
Change Translation Acquisition Change
ACCO Brands North America $(34.0) $0.8 $0.9 $(35.7)
ACCO Brands EMEA 72.8 18.2 42.7 11.9
ACCO Brands International (8.9) (9.4) 10.6 (10.1)
Total $29.9 $9.6 $54.2 $(33.9)

% Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
Change Translation Acquisition Change
ACCO Brands North America (4.6)% 0.1% 0.1% (4.8)%
ACCO Brands EMEA 19.9% 5.0% 11.7% 3.2%
ACCO Brands International (3.3)% (3.5)% 3.9% (3.7)%
Total 2.2% 0.7% 3.9% (2.4)%

Liquidity and Capital Resources

Our primary liquidity needs are to service indebtedness, fund capital expenditures, fund our acquisition strategy and support working capital requirements. Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held and seasonal borrowings under our ~~$500~~$600 million multi-currency revolving credit facility (the ~~"2017 Revolving~~"Revolving Facility"). As of September 30, ~~2018,~~2019, there were ~~$272.8~~$132.4 million in borrowings under our ~~2017~~ Revolving Facility and the amount available for borrowings was ~~$216.7~~$454.8 million (allowing for ~~$10.5~~$12.8 million of letters of credit outstanding on that date).

We maintain adequate financing arrangements at market rates.

Because of the seasonality of our business, we typically generate much of our cash flow from operating activities in the ~~first,~~ third and fourth quarters, as accounts receivables are collected, and we typically use cash in the second quarter to fund working capital in order to support the North America back-to-school season. We had a different cash flow pattern in the nine months of 2019, with a large operating cash outflow in the first quarter and a smaller outflow in the second quarter which resulted from our decision to purchase raw materials and finished goods inventory earlier than normal to secure supply and partially mitigate the effect of anticipated inflation and tariffs. As expected and as shown below, in the third quarter of 2019 we generated significantly higher operating cash inflow than we did last year, due to reduced payments for inventory.

Summary of Cash Flow by Quarter and Year-to-Date for 2019 and 2018:



	2019
	1st Quarter			2nd Quarter			3rd Quarter			Year-to-Date
Net cash (used) provided by operating activities	$	(61.3	)	$	(54.4	)	$	190.8		$	75.1

Net cash (used) by investing activities:	(12.5		)	(7.1		)	(49.5		)	(69.1		)

Net cash provided (used) by financing activities:	107.6			54.3			(196.0		)	(34.1		)
Effect of foreign exchange rate changes on cash and cash equivalents	(0.3		)	0.8			(1.7		)	(1.2		)
Net increase (decrease) in cash and cash equivalents	$	33.5		$	(6.4	)	$	(56.4	)	$	(29.3	)

	2018
	1st Quarter			2nd Quarter			3rd Quarter			Year-to-Date
Net cash provided (used) by operating activities	$	60.4		$	(66.9	)	$	91.2		$	84.7

Net cash (used) by investing activities:	(8.0		)	(9.0		)	(46.4		)	(63.4		)

Net cash (used) provided by financing activities:	(7.0		)	99.1			(88.2		)	3.9
Effect of foreign exchange rate changes on cash and cash equivalents	0.4			(6.7		)	(0.8		)	(7.1		)
Net increase (decrease) in cash and cash equivalents	$	45.8		$	16.5		$	(44.2	)	$	18.1

Our Brazilian ~~business is~~businesses are also highly seasonal due to the timing of the back-to-school season, which coincides with the calendar year-end in the fourth quarter. Due to various tax laws, it is costly to transfer short-term working capital in and out of Brazil; therefore, our normal practice is to hold seasonal cash requirements in Brazil, and invest it in short-term Brazilian government securities. Consolidated cash and cash equivalents ~~was $95.0~~were $37.7 million as of September 30, ~~2018,~~2019, approximately ~~$55~~$9 million of which was held in Brazil. In the third quarter of 2019 we used US$42.1 million of Brazil's cash on hand to fund the Foroni Acquisition.

On February 12, 2018, the Company's Board of Directors approved the initiation of a cash dividend program under which the Company intends to pay a regular quarterly cash dividend of $0.06 per share on its common stock ($0.24 per share on an annualized basis). The declaration, payment and amount of future dividends will be at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results of operations, cash flows and other factors.

Our priorities for cash flow use over the near term, after funding business operations, including restructuring expenses, are funding strategic acquisitions, reducing debt, ~~reduction, share repurchases,~~paying dividends and funding strategic acquisitions. Additionally, income tax payments are anticipated to increase to $44 million for the 2018 year, compared to $35 million paid in the 2017 year, primarily due to the fact that the U.S. has exhausted the benefit of net operating losses.repurchasing shares.

The current senior secured credit facilities have a weighted average interest rate of ~~2.62%~~2.61 percent as of September 30, ~~2018~~2019 and our senior unsecured notes have a fixed interest rate of ~~5.25%.~~5.25 percent.

Restructuring and Integration Activities

From time to time the Company may implement restructuring, realignment or cost-reduction plans and activities, including those related to integrating acquired businesses.

During the three and nine months ended September 30, ~~2018,~~2019, the Company recorded ~~an aggregate $1.1~~$2.1 million and ~~$7.9~~$4.8 million in restructuring expenses, respectively, primarily related to additional changes in the operating structure of the North America ~~segment and the continued integration of Esselte within the EMEA~~ segment. For additional details, see "Note 10. Restructuring" to the condensed consolidated financial statements contained in Item 1. of this report.

In addition, during the three and nine months ended September 30, ~~2018,~~2019, the Company recorded an aggregate ~~$0.9~~$1.4 million and ~~$4.4~~$1.9 million, respectively, in non-restructuring integration expenses related to the integration of ~~the~~recent acquisitions with ACCO Brands ~~and Esselte~~ operations.

The Company expects to recognize $3.1 million of additional restructuring expenses, in the fourth quarter of 2018, associated with our ACCO Brands North America segment, which have not yet been recorded, pursuant to GAAP rules.

Cash Flow for the Nine Months Ended September 30, ~~2018~~2019 and September 30, ~~2017~~2018

Cash Flow from Operating Activities

Cash ~~provided by~~sourced from operating activities during the nine months ended September 30, ~~2018~~2019 of $75.1 million was $9.6 million less than the $84.7 million ~~was lower by $31.0 million than the $115.7 million provided~~sourced in the ~~2017 period, due to lower profit~~2018 period. The decrease resulted from income tax payments which were $14.1 million higher and ~~reduced cash from net~~higher working capital requirements (accounts receivable, inventories, and accounts payable)~~. Accounts receivable contributed $46.2 million~~ in ~~the 2018 period as collections were adversely affected by regional sales mix and sales timing,~~2019 compared to ~~$64.6 million in the prior-year period which was benefited~~2018, partially offset by ~~the timing of the 2017 Esselte Acquisition. Unfavorable foreign currency translation in 2018 also contributed to the~~ lower ~~cash contribution from accounts receivable. Earlier than usual purchases of raw materials, notably paper, in order to secure supply~~customer incentive and lock-in lower pricing, drove both inventory and accounts payable levels above the prior year. In addition, higher than normal post-acquisition payments in 2017 following the acquisition of Esselte reduced cash from accounts payable in the prior year. During the nine months of 2018, cash was also used to fund significant employee ~~annual~~ incentive ~~payments, along with pension contributions, interest and tax payments, all of which were broadly in line with payments made during the prior year.~~payments.

The table below shows our cash flow ~~from~~used or provided by accounts receivable, inventories and accounts payable for the nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:


	Nine Months Ended						Nine Months Ended						Amount of Change
(in millions)	September 30, 2018			September 30, 2017			September 30, 2019			September 30, 2018			Amount of Change
Accounts receivable	$	46.2		$	64.6		$	54.0		$	46.2		7.8
Inventories	(81.2		)	(48.4		)	34.8			(81.2		)	116.0
Accounts payable	39.1			(3.5		)	(102.1		)	39.1			(141.2		)
Cash flow provided by net working capital	$	4.1		$	12.7
Cash flow (used) provided by net working capital							$	(13.3	)	$	4.1		$	(17.4	)

Inventories generated $34.8 million in 2019, a favorable change of $116.0 million when compared with the $81.2 million used in the prior year. Inventory was higher at year end 2018 following advanced purchases of materials to secure supply and to partially reduce the anticipated inflation, including tariffs, which have continued to inflate the value of inventory held. As a consequence, incremental purchases in 2019 were lower than the prior year and inventory levels are now similar to our seasonal normal although reflecting inflation.

•

Accounts payable used $102.1 million in 2019, an adverse change of $141.2 million when compared with the $39.1 million contributed in 2018. This was due to a cycle of earlier inventory purchases which occurred in the fourth quarter of 2018 that resulted in unusually high payables at 2018 year end (and higher payments earlier in 2019).Incremental purchases in the third quarter of 2019 were lower than the prior year as inventory was consumed.

Accounts receivable contributed $54.0 million in 2019, compared to a contribution of $46.2 million in the prior year. The $7.8 million improvement resulted from strong third quarter back-to-school collections in North America, partially offset by lower 2018 year-end accounts receivable which reduced collections in early 2019.

Income tax payments were $14.1 million higher than a year ago due tointernational tax payments in 2018 that were reduced by the use of tax losses accumulated in prior years, and deferred payments related to legal entity reorganizations. Partially offsetting the adverse change in cash flow from income tax and working capital were lower payments of customer incentives, primarily due to the settlement of disputed amounts which occurred in the prior year; and, payments of annual and long-term employee incentive payments in the first quarter of 2019 that were $12 million lower than those in the prior year.

Cash Flow from Investing Activities

Cash used by investing activities was ~~$63.4~~$69.1 million and ~~$311.0~~$63.4 million for the nine months ended September 30, 2019 and 2018, respectively. The 2019 cash outflow included $42.1 million of preliminary purchase price paid for the Foroni Acquisition in Brazil and ~~2017, respectively.~~$5.2 million of purchase price paid to acquire certain Cumberland assets in Australia, and is net of receipt of the final purchase price adjustment associated with the GOBA Acquisition. The 2018 cash outflow ~~includes~~included $37.3 million of preliminary purchase price, net of cash acquired, paid for ~~GOBA, while the 2017 outflow reflects $292.3 million of purchase price, net of cash acquired, paid for Esselte.~~GOBA. For further details, see "Note 3. Acquisitions" to the condensed consolidated financial statements contained in Item 1. of this report. Capital expenditures were ~~$26.3~~$21.9 million and ~~$18.8~~$26.3 million for the nine months ended September 30, 2019 and 2018, ~~and 2017, respectively, with the increase compared to the prior-year period driven by information technology system-related investments.~~respectively.

Cash Flow from Financing Activities

Cash ~~provided~~used by financing activities was ~~$3.9~~$34.1 million for the nine months ended September 30, ~~2018,~~2019, compared ~~to $247.7~~with $3.9 million provided by financing activities for the same period of ~~2017.~~2018. Cash ~~sourced~~used in 2019 includes $58.0 million for repurchases of our common stock, payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and $18.1 million for the payment of dividends to stockholders, partially offset by incremental net borrowings of $45.3 million.

Cash provided by financing activities for the nine months ended September 30, 2018, ~~includes~~was $3.9 million and reflects incremental net borrowings of $99.1 ~~million,~~million. This was partially offset by $75.7 million for repurchases of our common stock and payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and $18.9 million for the payment of ~~dividends.~~dividends to stockholders.

Cash provided in 2017 reflects proceeds from net long-term borrowings of $293.6 million largely in connection with the Esselte Acquisition. Additionally, we used cash of $42.4 million for repurchases of common stock and payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and paid $3.5 million of debt issuance costs associated with the 2017 debt refinancing in connection with the Esselte Acquisition.

Credit Facilities and Notes Covenants

As of and for the periods ended September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company was in compliance with all applicable loan covenants.

Guarantees and Security

Generally, obligations under the ~~2017~~ Credit Agreement are guaranteed by certain of the Company’s existing and future subsidiaries, and are secured by substantially all of the Company’s and certain guarantor subsidiaries’ assets, subject to certain exclusions and limitations.

Adequacy of Liquidity Sources

We believe that cash flow from operations, our current cash balance and other sources of liquidity, including borrowings available under ~~the 2017~~our Revolving Facility, will be adequate to support our requirements for working capital, capital and restructuring expenditures and to service indebtedness for the foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended September 30, ~~2018~~2019 or through the date of this report.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision of the Chief Executive Officer and the Chief Financial Officer, and with the participation of our Disclosure Committee, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, ~~2018.~~2019.

(b) Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial ~~reporting.~~reporting, except that in August 2019, we completed the Foroni Acquisition, which represented $5.7 million of our consolidated net sales for the quarter ended September 30, 2019 and approximately $61 million of our consolidated assets as of September 30, 2019.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are various claims, lawsuits and pending actions against us incidental to our operations, including the income tax ~~assessment~~assessments against our Brazilian subsidiary, Tilibra Produtos de Papelaria Ltda (the ~~"Brazilian~~"Brazil Tax ~~Assessment"~~Assessments"), which is more fully described in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and in "Part I, Item 1. Note 11. Income Taxes - ~~Income~~Brazil Tax ~~Assessment - Tilibra"~~Assessments" to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. It is the opinion of management that (other than the ~~Brazilian~~Brazil Tax ~~Assessment)~~Assessments) the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow.

ITEM 1A. RISK FACTORS

~~Each of the following~~There have been no material changes in our risk factors ~~updates and supersedes, in its entirety, any similarly captioned risk factor contained~~from those disclosed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2017, or "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2018. ~~The risk factors below should be reviewed together with the other risk factors contained in our 2017 Annual Report which remain unchanged:~~

A limited number of large customers account for a significant percentage of our net sales, and a substantial reduction in sales to, or gross profit from, or a significant decline in the financial condition of, one or more of these customers can materially adversely impact our business and results of operations.

Our top ten customers accounted for 42% and 44%, respectively, of our net sales for the nine months ended September 30, 2018 and the year ended December 31, 2017. The loss of, or a significant reduction in sales to, one or more of our top customers, or significant adverse changes to the terms on which we sell our products to one or more of our top customers, can have a material adverse effect on our business, results of operations and financial condition.

The competitive environment in which our large customers operate is rapidly changing. Office superstores, wholesalers and traditional retail customers (especially in our more developed geographies such as the U.S., Europe and Australia) face increasing competition, especially from mass merchants and e-tailers, which is driving a decline in their overall market share. In response, they continue to evolve their businesses, by shifting their channel or geographic focus, making changes to their operating models and merchandising strategies and, in many cases, consolidating or divesting unprofitable or unattractive segments of their businesses. All of these changes and the associated channel disruption and uncertainties, have made, and will continue to make, our business relationships with these customers more challenging and unpredictable. Their responses to the increasing competition include, but are not limited to: (i) increasing demands for better pricing, more promotional programs and longer payment terms; (ii) reducing the shelf space allotted to, and carrying a narrower assortment of, office and school products; (iii) increasing the amount of private label products, which compete with our branded offerings; and (iv) an overall reduction in the amount of inventory they hold. Lower sales through these traditional channels (which historically purchased products with relatively higher margins) has and are likely to continue to have an adverse impact on our sales, margins and results of operations.

In particular, the recently announced proposed acquisition of Essendant by Staples, which if completed will bring together two of our large U.S. customers, and the acquisition of U.S. independent dealers by both Staples and Office Depot, is creating substantial uncertainties and disruption in the wholesaler and independent dealer channels in the U.S., which has and will continue to impact our customer’s buying patterns. During the second quarter of 2018 our lower sales to wholesalers were anticipated, but in the third quarter of 2018, we experienced larger-than-expected reductions in sales to the U.S. wholesaler channel which resulted in a significant reduction in our sales and margins and negatively impacted the performance of our North America segment, as well as our overall performance. We expect this trend to continue until the uncertainties in the commercial channel are resolved and the situation stabilizes.

Our larger customers generally have the scale to develop supply chains that permit them to change their buying patterns, or develop and market their own private label and other economy brands that compete with some of our products. This ability also makes it easier for them to resist our efforts to increase prices, reduce inventory levels, reduce the range of our branded products they offer and, potentially, de-list our products. Given the significance of our large customers to our business, all of the actions they take in response to competitive pressures and economic conditions have, and will continue to, significantly impact our sales and margins, especially in North America, EMEA, Australia and Mexico.

The economic climate in some of the countries in which we operate is volatile. A slowing economy in our key markets or changes in consumer buying habits could adversely affect the financial health of one or more of our large customers which, in turn, could have an adverse effect on our sales, results of operations and financial condition. The sell-through of our products by our customers is dependent in part on high quality merchandising and an appealing store environment to attract consumers, which requires continuing investments by our customers. Large customers that experience financial difficulties may fail to make such investments or delay them, resulting in lower sales and orders for our products.

~~Changes to U.S. trade policies and regulations, as well as the overall uncertainty surrounding international trade relations, could have a material adverse effect our business.~~

Recent changes in U.S. trade policies, including tariffs on imports from China and on steel and aluminum we use in our U.S. manufacturing operations, have had, and we expect that they will continue to have, an increasingly adverse effect on our costs of products sold and margins in our North America segment. Additionally, further changes in U.S. trade policies appear likely, including additional import tariffs, and would likely adversely impact our business. In response to these changes, other countries have and may continue to change their own trade policies, including the imposition of tariffs and quotas, which could also adversely affect our business outside the U.S. The uncertainty surrounding U.S. trade policy makes it difficult to make long-term strategic decisions regarding the best way to respond to these pressures and could also increase the volatility of currency exchange rates. Further, the knock-on effect of the tariffs has resulted in an increase in the cost of U.S.-sourced products commensurate with the tariffs, as well as increased transportation and distribution costs as companies accelerate imports in anticipation of higher future tariffs or an increase in their scope.

In order to mitigate the impact of these trade-related increases on our costs of products sold, we have increased, and intend to continue to increase prices in the U.S. to recover the impact of known inflation. Over the longer term, we may make some changes in our supply chain and, potentially, our U.S. manufacturing strategy. There can be no assurance that we will be able to successfully pass on these costs through price increases or adjust our supply chain by locating alternative suppliers for raw materials or finished goods at acceptable costs or in a timely manner, and without incurring significant costs. Additionally, implementing price increases may cause our customers to find alternative sources for their products or lower their volumes with us, resulting in reduced sales. Conversely, when tariffs decline, customer demands for lower prices could result in lower sale prices and, to the extent we have existing inventory, lower margins. As a result, fluctuations in tariffs have and may continue to have a material adverse effect on the Company’s business, results of operations and financial condition.

Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies, including tariffs, could materially adversely impact our sales, margins, results of operations and financial condition.

~~Shifts in the channels of distribution for our products could adversely impact our sales, margins and results of operations.~~

Due to the competitive pressures and resulting decline in market share of the traditional office superstore, and wholesaler and independent dealer channel, as well as the ongoing changes and uncertainties in these channels (especially in the U.S., Europe and Australia), our ongoing strategy is to grow sales and market share in the faster growing mass merchant and e-tailer channels, increase our direct sales to independent office products dealers, and expand distribution into new and growing channels and geographies while maintaining strong margins. We may not be successful in executing against this strategy fast enough to offset the declines we are experiencing in the traditional office superstore and wholesaler channels due to competitive pressures and uncertainties, if at all. Additionally, the changes in our customer and product mix which may result from the shift in sales and growth in market share in these faster growing channels, may negatively impact our margins. Our inability to successfully manage the shift away from distribution channels which are declining, and grow sales and market share with customers in faster growing channels, could have a material adverse impact on our sales, margins, results of operations and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

The following table provides information about our purchases of equity securities during the quarter ended September 30, ~~2018:~~2019:

Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program⁽¹⁾

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
July 1, 2018 to July 31, 2018 307,578
$ 13.76
307,578
$ 128,731,632
August 1, 2018 to August 31, 2018 1,036,489
12.51
1,036,489
115,770,058
September 1, 2018 to September 30, 2018 559,991
12.15
559,991
108,964,228
Total 1,904,058
$ 12.60
1,904,058
$ 108,964,228



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
July 1, 2019 to July 31, 2019	1,504,310	$	7.91	1,504,310	$	157,733,070
August 1, 2019 to August 31, 2019	353,935	9.46		353,935	154,384,473
September 1, 2019 to September 30, 2019	249,378	9.59		249,378	151,993,771
Total	2,107,623	$	8.37	2,107,623	$	151,993,771

(1) On ~~October 28, 2015,~~February 14, 2018, the Company announced that its Board of Directors had approved ~~the~~an authorization to repurchase of up to $100 million in shares of its common stock. On ~~February 14, 2018,~~August 7, 2019, the Company announced that its Board of Directors had approved an authorization to repurchase up to an additional $100 million in shares of its common stock.

The number of shares to be purchased, if any, and the timing of purchases will be based on the Company's stock price, leverage ratios, cash balances, general business and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company may repurchase its shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades or pursuant to repurchase plans designed to comply with the Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Any stock repurchases will be subject to market conditions, SEC regulations and other considerations and may be commenced or suspended at any time or from time to time, without prior notice. Accordingly, there is no guarantee as to the number of shares that will be repurchased or the timing of such repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit

Number Description of Exhibit


~~10.1~~3.1	~~First Amendment to the Third Amended and~~ Restated ~~Credit Agreement, dated as~~Certificate of ~~January 27, 2017, among the Company, certain subsidiaries~~Incorporation of ~~the Company, Bank of America, N.A., as administrative agent, and the other lenders party hereto~~ACCO Brands Corporation *


31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *


31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *


32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **


32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **


101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document


104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



*	Filed herewith.



**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



REGISTRANT:

ACCO BRANDS CORPORATION

By:	/s/ Boris Elisman
Boris Elisman
Chairman, President and Chief Executive Officer (principal executive officer)

By:	/s/ Neal V. Fenwick
Neal V. Fenwick
Executive Vice President and Chief Financial Officer (principal financial officer)

By:	/s/ Kathleen D. Hood
Kathleen D. Hood
Senior Vice President and Chief Accounting Officer (principal accounting officer)

Date: October 30, ~~2018~~2019

4849



(in millions)	Balance at December 31, 2017			Adjustments due to ASU 2014-09			Balance at January 1, 2018
Assets:
Inventories	$	254.2		$	(3.5	)	$	250.7
Other current assets	29.2			6.9			36.1

Liabilities and stockholders' equity:
Accrued customer program liabilities	141.1			1.1			142.2
Other current liabilities	113.8			0.1			113.9
Deferred income taxes	177.1			0.6			177.7
Accumulated deficit	(739.2		)	1.6			(737.6		)



(in millions)	At January 31, 2017
Calculation of Goodwill:
Purchase price, net of working capital adjustment	$	326.5

Plus fair value of liabilities assumed:
Accounts payable and accrued liabilities	121.9
Deferred tax liabilities	83.6
Pension obligations	174.1
Other non-current liabilities	5.8
Fair value of liabilities assumed	$	385.4

Less fair value of assets acquired:
Cash acquired	34.2
Accounts receivable	60.0
Inventory	41.9
Property, plant and equipment	75.6
Identifiable intangibles	277.0
Deferred tax assets	106.3
Other assets	10.4
Fair value of assets acquired	$	605.4

Goodwill	$	106.5



(in millions)	Balance at December 31, 2016		Esselte Acquisition (4)		Provision		Cash Expenditures			Non-cash Items/ Currency Change		Balance at September 30, 2017
Employee termination costs	$	1.4	$	1.4	$	13.2	$	(5.2	)	$	0.5	$	11.3
Termination of lease agreements	0.1		2.0		1.9		(1.2		)	0.2		3.0
Other	—		0.1		1.0		(0.3		)	—		0.8
Total restructuring liability	$	1.5	$	3.5	$	16.1	$	(6.7	)	$	0.7	$	15.1



	2018 1^ST QTR Average Versus 2017 1^ST QTR Average	2018 2^ND QTR Average Versus 2017 2^ND QTR Average	2018 3^RDQTR Average Versus 2017 3^RD QTR Average	2018 YTD Average Versus 2017 YTD Average
Currency	Increase/(Decline)	Increase/(Decline)	Increase/(Decline)	Increase/(Decline)
Euro	15%	9%	(1)%	7%
Australian dollar	4%	1%	(7)%	(1)%
Canadian dollar	5%	4%	(4)%	2%
Brazilian real	(3)%	(11)%	(20)%	(11)%
British pound	12%	7%	—%	6%
Mexican peso	8%	(4)%	(6)%	(1)%
Japanese yen	5%	2%	—%	2%